It can take a lot of effort to get an Offer in Compromise (OIC) accepted. Once that happens, you just want to make sure you comply with all the offer terms and don’t do anything that could cause your OIC to go into default.
Make Your Payments
Your OIC must be paid in either a lump-sum or periodic payment arrangement. The lump-sum option can actually involve up to 5 payments within a period of 5 months.
The periodic payment arrangement can last up to 24 months. The important thing is to make all of your payments on time and in full.
If you miss a payment, your OIC can go into default. The full balance of your tax debt can be reinstated, less any payments you’ve made.
File Your Returns
Your work isn’t done once you’ve paid off your OIC. There are strings attached to using the OIC program, and one of them is a promise to stay in tax compliance for the next five years.
That means you need to file all of your returns on time and make all required tax payments for the next five years. If you forget to file a tax return or make an estimated tax payment, your offer can be defaulted, even after you’ve already made all your OIC payments.
Your tax refund will also be offset if you receive one during the calendar year the OIC is accepted.
Resolve All of Your Tax Debt
There’s one other issue that can impact your OIC after it has been accepted—a failure to pay tax debt for prior tax years that weren’t included in your original offer.
This could happen if you have an unfiled tax return from many years ago. The IRS should reject an OIC for a taxpayer with an unfiled tax return, but if they don’t catch the unfiled return, your offer could end up being accepted. Tax could also be assessed for a prior year if the IRS adjusts your return.
You can avoid this issue by filing all required returns and making sure all of your old tax debt is included in your offer. Once you’ve gone through the process of getting an OIC accepted, you don’t want any old tax debts coming back to haunt you.
Get help settling your tax debt by calling The Gartzman Law Firm at (770) 939-7710. We can help you negotiate an Offer in Compromise or find another creative solution to your tax problems.