IRS Notice CP576 is the official notification that the Internal Revenue Service has accepted your Offer in Compromise (OIC). This notice confirms the terms of your agreement, including the total accepted amount and the required payment schedule.
Response Deadline
Immediate action is required to begin the payment schedule outlined in the notice. Failure to make the first required payment by the specified date will automatically void the OIC.
Receiving Notice CP576 is excellent news, as it signifies that the IRS has agreed to settle your outstanding tax liability for a lower amount than originally owed. This notice is not a bill; rather, it is a legally binding contract detailing the specific conditions you must meet to keep the OIC agreement valid. It will clearly state the accepted offer amount, whether it is a lump sum or periodic payment offer, and the exact dates payments are due. Crucially, the notice also explains the compliance requirements, which typically include timely filing all future tax returns and paying all future tax liabilities (including estimated taxes) for a five-year period following the acceptance date. Failure to adhere strictly to these terms will result in the immediate default of the OIC, and the IRS will reinstate the full original tax liability, minus any payments already made.
You receive Notice CP576 because the IRS has completed its review of your Form 656, Offer in Compromise, and has determined that your financial situation meets the criteria for acceptance. Common reasons leading to this notice include:
Since CP576 is confirmation of a contract, your next steps focus entirely on compliance and execution of the payment plan outlined in the notice. Immediate action is required to avoid defaulting on the agreement.
The consequences of failing to comply with the terms of Notice CP576 are severe. If you miss a payment deadline or fail to file or pay any tax liability during the five-year compliance period, the IRS will immediately default your OIC. When an OIC defaults, the IRS reinstates the entire original tax liability, plus statutory interest and penalties, minus any payments you made toward the OIC. Furthermore, the IRS will resume all collection actions, including the filing of tax liens and issuing levies on wages or bank accounts, to collect the full reinstated balance.
Dexter can guide you through the entire response process step-by-step.
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