Stay of collection actions

While a person has a compromise offer pending, the IRS may not levy against that person's property to satisfy the liability covered by the offer. If the offer is ultimately rejected, the levy prohibition remains in effect for 30 days after the rejection and during the pendency of any timely filed appeal of the rejection. An offer is pending from the date that it is accepted by the IRS for processing (Code Sec. 6331(k)(1)).

Similarly, the IRS may not levy on the property or rights to property of a person while that person has an installment agreement offer pending with the IRS. The prohibition extends for 30 days after an installment agreement offer is rejected by the IRS and during the pendency of any appeal of the rejection, providing the appeal is filed within 30 days of the rejection. Furthermore, no levy may be made while an installment agreement is in effect. If the IRS terminates the installment agreement, no levy may be made for 30 days after the termination and during the pendency of any appeal of the rejection, providing the appeal is filed within 30 days of the rejection (Code Sec. 6331(k)(2)).

The prohibition does not apply to any unpaid tax if the taxpayer files a written notice waiving the levy prohibition. Moreover, the prohibition does not apply to any levy to carry out an offset under Code Sec. 6402 or to any levy predating the pendency of the compromise offer (Code Sec. 6331(i)(3) and Code Sec. 6331(k)(3)). The prohibition against levy does not apply if the IRS believes that collection of the liability is in jeopardy (Code Sec. 6331(i)(3)(A)(ii) and Code Sec. 6331(k)(3)).

The IRS is also prohibited from initiating any court action with respect to the liability that is the subject of the compromise offer. However, this prohibition does not apply to any counterclaim with respect to the liability or any related proceeding (Code Sec. 6331(i)(4) and Code Sec. 6331(k)(3)). Moreover, the 10-year statute of limitations on collection is suspended during the period the IRS is prohibited from making a levy or taking other collection measures against the liability that is subject to the compromise offer (Code Sec. 6331(i)(4) and Code Sec. 6331(k)(3)).

The IRS will not levy against the property or rights to property of a taxpayer who has submitted an offer to compromise, in order that the IRS may collect the liability that is the subject of the offer:


(1) during the period the offer is pending;



(2) for 30 days immediately following rejection of the offer; and



(3) for any period when a timely filed appeal from the rejection is being considered by Appeals (Reg. §301.7122-1(g)(1)).


The IRS may levy to collect a liability that is subject to an offer in compromise during the period that it is evaluating such offer, if it determines that the collection of the liability is in jeopardy (Reg. §301.7122-1(g)(3)).