When an Offer in Compromise is filed with the Internal Revenue Service (IRS) it must be deemed “processable” before the IRS will review it. If the Offer is unprocessable, the IRS will return or reject it. The Offer needs to be complete and submitted on the appropriate forms along with the appropriate filing fee. Moreover, it is important that the taxpayer file the Offer at the appropriate Offer in Compromise Service Center. If an Offer is deemed unprocessable and returned to the taxpayer this will not prevent the taxpayer from re-filing the Offer, but may cause significant delay.
There are a number of additional factors that may cause an Offer to be unprocessable. A taxpayer must be “current” or compliant at the time an Offer is filed with the IRS. All tax returns both personal and business must be filed. The IRS will also determine whether sufficient tax deposits and withholdings have been made. Also, a taxpayer cannot be in bankruptcy at the time the Offer is filed. If the taxpayer meets the procedural requirements for having their Offer processable then they should be able to have their Offer reviewed on the merits of their factual circumstances.