A new law has been enacted that increases the cost to taxpayers who submit an offer in compromise to the IRS.  In addition to a $150 user fee, a portion of the settlement amount must also be paid when requesting an offer.  For taxpayers who propose to make a lump-sum settlement, they must also submit 20% of the offer amount up front.  For offers that will be paid in monthly installments, all proposed installment payments must be made while the IRS investigates the offer.

On a bright note, if the IRS fails to process an offer within two years, the offer is deemed to have been accepted.

This law becomes effective with offers that are received by the IRS on or after July 16, 2006.