Features

• Collateral agreements also allow the government to collect funds in addition to the amount secured by the offer in compromise. Additional terms that are not included in standard IRS Form 656 (offer of compromise) can be added through the use of the collateral agreement. When additional terms are added they help the government to collect part or all of the difference between the amount of the offer and the liability compromised.
  
  

Securing Agreements

• Collateral agreements are only secured by the IRS when they anticipate a significant recovery by the taxpayer. They will not accept payments that are less than what the taxpayer can financially afford to pay off. Taxpayers who expect a substantial increase in income in the future or who have real or personal property that is being depreciated are eligible for the collateral agreement.
  
  

Monitoring

• Collateral agreements are monitored by the IRS to ensure compliance and they will be monitored on an annual basis until the losses are extinguished. Taxpayers who enter into a specific type of collateral agreement (such as waiver of losses) should also be aware of the costs associated with monitoring the agreement and that the agreement process could last for decades.