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IRM sec. 5.8.7.6.1 or policy statement P-5-89 in the rejection
narrative. Rather, respondent referenced IRM sec. 5.8.7.6(5) as
the reason for rejecting petitioner’s offer.
Offers-in-compromise contain default provisions. IRM sec.
5.19.7.3.20.5(1) (Feb. 1, 2004) provides that “Taxpayers must
agree to the future compliance provisions when offers are
accepted. The taxpayer must timely file all tax returns and pay
all taxes due during the compliance period. The compliance
period is five years from the acceptance date or until the offer
amount is paid in full, whichever is longer.” It further
provides “Failure to adhere to the compliance terms could result
in the default of the OIC and reinstatement of compromised
liabilities.” IRM sec. 5.19.7.3.20.5(4) (Feb. 1, 2004). Form
656 Item 8(n) elaborates by providing that if the taxpayer
fail[s] to meet any of the terms and conditions of the
offer and the offer defaults, then the IRS may:
-immediately file suit to collect the entire unpaid
balance of the offer
-immediately file suit to collect an amount equal to
the original amount of the tax liability as liquidating
damages, minus any payment already received under the
terms of this offer
-disregard the amount of the offer and apply all
amounts already paid under the offer against the
original amount of the tax liability
-file suit or levy to collect the original amount of
the tax liability, without further notice of any kind.
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