A question came up recently about whether or not a taxpayer must submit his or her Offer in Compromise fees in the form of a cashier’s check or money order as opposed to a personal check.
Just a little background first. When filing an Offer in Compromise, you must submit two payments: one is the $186 application fee, and the other is the 20% deposit or initial offer payment. That’s 20% for “cash offers” or the first of 24 payments for “periodic payment” offers (the difference between these two types is not relevant here and could be the subject of a completely different blog entry). If either of these payments are missing or insufficient, the offer is almost certainly going to be returned and you’ll have to start all over again.
First of all, the IRS does not require cashier’s checks or money orders. In fact, the instructions in the Form 656 Booklet specifically state that a taxpayer may send a “personal check, cashier’s check, or money order.” However, what is required is that the money be available in your personal checking account when the personal check is cashed by the IRS. Since a cashier’s check or money order is already paid for, there is no risk of insufficient funds. Therefore, if your tax attorney asks for a cashier’s check or a money order, he is not being a jerk, he is being cautious.