IRS Retroactively Defaulted My Offer in Compromise Due to Failure to Maintain Compliance in the 5 Year Look-Forward Period; Why?
Rejected OIC- Failure to maintain compliance in the 5-year look-forward period
I just got off the phone with a gentleman who said his Offer in Compromise had been retroactively defaulted in the 5-year look-forward period. I asked if he had a new debt in the five years after his Offer acceptance. He said he had a new debt in his second year after his acceptance because he had to take some money out of his 401K. I told him, when he signed the Form 656 as part of his Offer, he signed an agreement that said he would timely file and not owe the IRS in the five years after the acceptance of his Offer. I informed the IRS usually will send you a notice to correct the problem. He said he did receive the request for payment, but kind of fell back into his old ways and ignored it. I suggested that he fall on his sword and beg for forgiveness and ask if he made the payment IMMEDIATELY, would they reinstate the offer. If not, he likely made a HUGE mistake.
The following are the most common reasons for denial of an Offer in Compromise:
- Failure to maintain compliance by making estimated payments
- Missing information
- Failure to disclose assets
- Failure to maintain compliance due to outstanding returns
- Active Bankruptcy
- Frivolous submissions
- Failure to pay the processing fee unless below a specific income level
- Failure to maintain compliance in the 5-year look-forward period
- Failure to make the non-refundable payment with the application
- Default on a previously accepted Offer
- Do not qualify for an Offer- Considered Full Pay
- Living expenses are considered excessive
- Dissipation of assets
This is item 8, Failure to maintain compliance in the 5-year look-forward period
Should you get help?
I have seen many people try to prepare their own OIC and fail because they do not fully understand the art of dealing with the IRS. Yes, you can submit an Offer in Compromise yourself but if you are trying to considerably reduce your debt, I recommend you rethink your position.
An “accepted” OIC is not the same as a “successful” OIC.
There is more to it. Sure, the average taxpayer can fill out the forms and after spending hours reading and rereading the instructions provide the substantiation needed for an application to be accepted. How do you measure success? To me, success is measured with an approval on the LOWEST DOLLAR AMOUNT the IRS will accept.
If you feel that you may be in over your head, or just want to get a second opinion, let’s set up a short call. To avoid the back and forth emails and phone tag, I have included a link to my Calendar https://calendly.com/taxman/tax-problem-resolution-initial-consultation. Let’s set up a 30 min. phone conference to get to know each other. The phone number to call is 855-829-5877 and my extension is 203.