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How to protect my Offer in Compromise from being revoked

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    Recent case law held that the IRS properly terminated an offer in compromise where a taxpayer failed to comply with the terms of the agreement by not filing and paying taxes in a timely manner for the five years following acceptance of the offer and by incurring a delinquent tax liability for a subsequent tax year because the taxpayer materially breached the terms of the offer. If the IRS revokes your Offer in Compromise, they will reinstate the full amount of your pre-compromise tax liability including any back penalties and interest previously forgiven, and begin aggressive collection efforts on the revised balance due. Therefore, it is imperative that once your Offer in Compromise has been approved, you need to take the following steps to make sure the IRS does not revoke your Offer:

    • You must file your taxes timely for the five tax years following acceptance of your offer.
    • If you cannot file your 1040 by April 15th, you must request an automatic extension. If you extend, make sure you file your taxes by the extended individual deadline of October 15th. You must also timely file any related entities that flow into or effect your individual tax return. I.E. S Corporations, Partnerships and LLC’s.
    • You must pay your taxes on-time. If you owe, your taxes must be paid in full by April 15th. If you are self employed you need to make estimated tax payments that are sufficient to ensure you don’t have a balance due at April 15th.

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