Wednesday, June 4, 2008

Compromises: Withdrawal of offer in compromise

An offer in compromise (OIC) may be withdrawn by the taxpayer or the taxpayer's representative at any time prior to its acceptance. The offer is considered withdrawn upon the IRS's receipt of written notification of the withdrawal of the offer by personal delivery or certified mail, or upon issuance of a letter by the IRS acknowledging the taxpayer's intent to withdraw the offer (Reg. §301.7122-1(d)(3)). The IRS will advise the taxpayer that withdrawing the offer will forfeit the taxpayer's right to appeal (Internal Revenue Manual, 09-01-2005).

Deemed withdrawal of offer. A taxpayer who submits a periodic payment offer in compromise must include payment of the first proposed installment with the offer and continue making payments under the terms proposed while the offer is being evaluated (Code Sec. 7122(c)(1)(B), as added by the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222)). If the taxpayer fails to make a payment due under the terms proposed, the offer will be deemed withdrawn (Code Sec. 7122(c)(1)(B)(ii), as added by P.L. 109-222). However, the IRS is authorized to issue regulations waiving the payment requirement for offers based solely on doubt as to liability or filed by low income taxpayers (Code Sec. 7122(c)(2)(C), as added by P.L. 109-222).

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