Federal · Internal Revenue Service

Offer in compromise returned or rejected

Form 656 · Letter 5570 · Letter 1225

What it is: An offer to settle a liability for less than the full amount was returned without consideration (a processability defect) or rejected on the merits, usually because the IRS computed a higher reasonable collection potential than the amount offered.
The clock it starts: 30 days from the rejection letter to appeal to the Independent Office of Appeals on Form 13711. A returned offer has no appeal; it is corrected and resubmitted.
What a response has to establish: A line-by-line challenge to the collection potential computation (asset values, allowable expenses, future income) or a showing on doubt as to liability or effective tax administration.
Authority: IRC §7122
Treas. Reg. §301.7122-1
Form 656 Booklet
IRM 5.8.1
IRM 5.8.4

What CitedTax drafts for this notice

An appeal of the rejection on Form 13711 grounds, with the collection-potential items disputed and the manual provisions applied.

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Notice response Pricing

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