If the IRS accepts your transaction offer, you must comply with all the terms of your agreement with the agency. If you don't comply with the agreement, the IRS can sue you up to the original amount of the tax debt plus penalties and interest (minus any payments you made). Taxpayers who are currently in open bankruptcy proceedings will not be eligible for a transaction offer. Tax liabilities and other financial debts are resolved only through the bankruptcy process.
If you don't fall into this category, the IRS will accept an OCI for three reasons. First, if you have genuine questions regarding your tax liability, you must complete Form 656-L, commitment offer (question as to liability). The tax professional submitted an offer with details showing the business transition, and the offer was accepted. If you have an installment agreement, you don't have to make payments while your offer is being processed.
A periodic payment offer is defined as an offer in which the taxpayer makes six or more monthly payments within 24 months of accepting the offer. Once a warning signal appears, they will analyze your offer and documentation much more, which will only hinder your work. Keep in mind that ex parte communications are prohibited in the IRS, which means that an appeals officer cannot discuss his client's case with the offer specialist who rejected him. If your offer is not accepted and you have not incurred any additional tax debt, your installment agreement with the IRS will be reinstated at no additional charge.
However, taxpayers who meet the low-income criteria should still be able to pay the amount of the offer during the agreed period if the IRS approves the OCI. The IRS may default on the offer in the event of a transaction and reinstate the entire tax liability, minus all payments and credits received. If your client's offer was rejected due to lack of evidence, you'll want to strengthen your case before sending it to Appeals. Based on the transaction offer requirements, the non-refundable amount cannot be returned to the taxpayer if the offer is rejected or accepted.
If your company is not a sole proprietorship linked to your SSN, a separate offer is needed, with the application fee and payment of the offer. If it's more than you offered and you don't have special circumstances, the IRS will give you the opportunity to increase the offer amount. If you have a legitimate doubt that you owe part or all of the tax debt, you must complete a Form 656-L, Transaction Offer (Concerning Liability), PDF. Keep in mind that security agreements are not used to accept offers where the amount is lower than the taxpayer's current financial situation.
When taxpayers can't pay their taxes with their monthly assets and income, they may qualify for a transaction offer (OIC).