Can I change my Installment Agreement to an Offer in Compromise?
We just received a chat from a taxpayer that is on an Installment Agreement and their financial circumstances have gotten worse. He was asking if he could “change his mind’ and submit an Offer in Compromise?
The answer is yes, all you need to do is apply for the Offer in Compromise, if that is your best option.
Should I stop making the Installment Agreement Payment while the offer is pending?
The IRS informs you that you are supposed to continue making Installment Agreement payments while the offer is pending, but that is completely self-serving. We know that from the time your offer is accepted for processing until a decision has been reached plus 30 days, the IRS is stayed from taking any collection actions.
Stop making your Installment Agreement payments while you OIC is being reviewed. If your OIC is approved, you are done.
If you are not approved, then your case will eventually go back to collections, where you may have to reestablish your installment payments.
Remember, during the time period while the offer was pending, the penalties and interest continue to accrue on the debt.