We are preparing an offer in compromise to submit to IRS Appeals as a collection alternative in a collection due process hearing. The question has come up, do the taxpayers need to include the application fee and 20% of the lump sum payment with the materials submitted to Appeals? If there is some rule waiving (or deferring) these required payments when the offer in compromise is made within a CDP hearing, I cannot find it. Yet some people feel that the payments do not need to be included initially, and we would like to resolve the debate. What is the definitive answer?
I submitted an OIC as part of a CDP hearing and we submitted the complete package to the appeals officer as if it was going to the OIC unit. The impression given to me by the appeals officer was it was routed differently (through appeals v. going to Centralized OIC) but in all other respects the same as if submitted directly to Centralize OIC Unit.
Thanks for your response, and you were right on. The payments, both the user fee and the TIPRA payment, need to be included. There is no exception for offers submitted through Appeals in a CDP hearing. In our case, the Appeals Officer just told us to send the payments. She was not nasty about it or anything. To the contrary, she was very nice in all respects. In the future, though, I don’t think I will push our luck … we will send all payments along with the forms and documentation, and at least we won’t get bounced on that score.