When you enter into an offer of compromise do you still accrue interest and penalties; I will give you example

Question

When you enter into an offer of compromise do you still accrue interest and penalties; I will give you example. Lets say you owe 20k and the IRS oks the payment schedule over 5 years so you divide 60 into 20,000 for a paymetn of $333; has anyone doesn an offer of compromise I am just wondering if they still are hitting you with penalties and interest while you are paying them back; or is a set payment schedule like a car payment when you are paying the IRS back

thanks any help would be appreciated;

Answer 1

No.  If IRS accepts your offer it will be for payment on the terms stated in the contract.  

If you made this same offer in a lump sum you would only have to come up with $16,000.  

Answer 2

No, you don't accrue interest and penalties. Keep in mind, though, that most offers are not accepted. If you have the ability to make payments, you're generally not going to qualify for an OIC.

By the way, the amount that the IRS will accept is based on a formula. Read through IRS Form 656 carefully.