Letter 3276: Offer in Compromise Partial Payment Request

The IRS Letter 3276 is sent to taxpayers who have submitted an offer in compromise (OIC), which is a program allowing taxpayers to settle their tax debt for less than the full amount owed. This letter serves as a request for a partial payment to show good faith while the IRS reviews the OIC application. Making a partial payment during the review process indicates the taxpayer’s intent to comply and resolve their debt, even if the full amount is not immediately affordable.

Key elements of IRS Letter 3276 include:

1. Explanation of Offer in Compromise
   An offer in compromise allows taxpayers with significant financial hardship to settle their tax debt for less than the owed amount. Taxpayers typically apply for an OIC if they cannot afford to pay the full balance and can demonstrate that paying the reduced amount is the most they can reasonably afford.
2. Request for Partial Payment
   Letter 3276 details the IRS’s request for a partial payment, which is often a percentage of the proposed settlement amount. This payment serves as a demonstration of the taxpayer’s willingness to resolve their debt. While not mandatory, making this payment can favorably impact the IRS’s decision on the OIC.
3. Instructions for Making the Payment
   The letter provides guidelines on how to make the partial payment, including acceptable payment methods (e.g., check, money order, electronic payment). Taxpayers are advised to include identifying information to ensure the payment is credited to the correct account.
4. Consequences of Non-Payment
   Although the partial payment is typically not required, failing to submit it may weaken the taxpayer’s case by suggesting a lack of commitment to resolving the debt. The IRS may factor this into their decision when evaluating the OIC application.
5. Importance to Tax Debt Resolution
   For taxpayers seeking debt relief through an offer in compromise, making a partial payment as requested in Letter 3276 is a proactive step. This payment can improve the taxpayer’s chances of approval and expedite the OIC process, allowing them to reach a manageable resolution to their tax debt. Complying with the request indicates a sincere effort to settle the debt and aligns with the taxpayer’s objective to achieve financial stability.

Letter 3276 plays a key role in the offer in compromise process, encouraging taxpayers to demonstrate their commitment to debt resolution and helping the IRS assess the seriousness of their intent.