Offers Made To Delay Collection

Some people ask me to file an Offer in Compromise for them that they and I know will not be accepted. They just want to delay collection of the tax as long as possible. However, I do not do that for my clients. If I know my client will not qualify for an Offer, I seek other ways to solve his or her tax problem. Here is why. If you appeal the denial of your Offer to Tax Court to further delay collection and the court finds the appeal was for the purpose of delay, you can be fined up to $25,000.00. In fact, over the past several years taxpayers who filed frivolous appeals were fined over $126,000.00 by the Tax Court! Thus it is not a wise thing to do. Another reason not to file an Offer for the purpose of delay is that interest keeps accruing and the statute of limitations for collecting the tax is tolled (or stopped) during the time the Offer is being considered. Therefore, when your Offer is finally denied, you not only owe more tax than when you started, but the time the IRS has to collect the tax has also been extended.