One of the most common misunderstandings taxpayers have is that IRS compliance rules can void tax relief. Taxpayer’s believe: “I filed my returns, so I should be compliant now.” That’s not always accurate.
In the eyes of the Internal Revenue Service (IRS), filing is only one part of compliance. Filing alone does not protect taxpayers from losing tax relief, defaulting on an agreement, or triggering renewed enforcement.
This misunderstanding is why many taxpayers believe the IRS “changed its mind” or “went back on a deal,” when in reality, compliance was lost after relief was granted.
IRS Compliance Rules
Taxpayers tend to define compliance narrowly: Did I file the return? The IRS defines compliance much more broadly.
From the IRS’s perspective, compliance includes three ongoing requirements:
1. All required returns are filed on time, to include extensions
2. All current tax obligations are being paid on time
3. Compliance is maintained going forward
Filing resolves past obligations. Compliance determines whether relief survives.
The Five-Year Compliance Rule
Taxpayers who settle through an Offer in Compromise often believe the case is closed once the offer is accepted.
Offer in Compromise agreements require full compliance for five years following acceptance. A single late return, unpaid balance, or missed payment during that period can void the agreement and reinstate the original debt.
Currently Not Collectible (CNC) Compliance
Currently Not Collectible (CNC) status is not permanent. The IRS reviews CNC cases regularly, and any failure to file or pay current taxes can return the account to active collections.
Installment Agreement Compliance
Installment agreements also include ongoing compliance requirements. IRS compliance rules for Installment Agreements include filing on time (to include extensions) and not incurring new tax debt. Filing late or creating a new balance will cause an Installment Agreement to default. Collection actions will be restarted. It will be as if you never had an agreement with the IRS.
Tax relief solves the past problem. Compliance keeps new problems from arising. Tax relief is effective only when taxpayers stay compliant by paying based on agreed terms, filing all returns on time, and not creating new unpaid tax debt. Know where you stand today, so you can prevent enforcement tomorrow.
LuSundra Everett, EA is The Home Biz Tax Lady. She is a tax expert located in Chester, VA who will find the right solution for you! As an Enrolled Agent licensed through the Internal Revenue Service, LuSundra is authorized to represent taxpayers in all 50 states against the IRS and your state!
Through her work with ETS Tax Relief, she helps high income non-filers and small-business owners face the IRS with confidence, clarity, and a plan.
When you’re dealing with IRS letters, tax debt, or business tax issues, the right representation makes all the difference. At ETS Tax Relief, we work with individuals and business owners across Virginia to resolve tax problems, prevent future issues, and restore peace of mind.
If you’re ready to put your tax troubles behind you, visit http://www.etstaxrelief.com to learn more about how we can help.
