Letter 5490, Appeals Offer in Compromise Acceptance, confirms that the IRS Independent Office of Appeals accepted your offer in compromise. That usually happens in one of two ways: you appealed a rejected offer, or you submitted the offer as part of a Collection Due Process hearing.
The Terms You Must Keep
An accepted offer is a contract. Pay the accepted amount on the schedule in the offer. Under the standard terms of Form 656, you must also file all required returns and pay all taxes on time for five years after acceptance. The IRS keeps any refund for the calendar year in which the offer is accepted. If you breach the terms, the IRS can default the offer and reinstate the unpaid balance of the original liability, minus what you paid.
Liens and Records
Federal tax liens are released once the offer amount is paid in full. Keep Letter 5490, the offer, and proof of every payment permanently. If the IRS later sends a balance due notice for a compromised period, those documents end the conversation.
Congratulations. This is one of the best outcomes in tax collection. Protect it for five years.
If you have questions about the terms of Letter 5490, call us at (813) 229-7100.