Are estimated tax payments still required if the self-employed person had a loss the year before?

The issue here is not the safe harbor issue for penalties, but that the taxpayer cannot incur another balance once the Offer is filed. So, though the taxpayer may be safe harbored from having to do estimated tax payments because of a loss the prior year, it is the current year that matters. If the taxpayer has positive income in the current year, estimated tax payments must still be made regardless of the prior year\’s loss.

Now for a taxpayer with a current year loss, they do not technically need to make estimated tax payments, but we recommend they do make them. The reason is if there are no payments in the system when the centralized Offer Unit receives the Offer it appears that there is a lack of compliance, and the Offer Unit may just return the Offer as non-processable. Given the Offer units predisposition to getting rid of Taxpayer Offer-in-Compromises if possible, we recommend making $50 quarterly estimated tax payments if nothing is due. By doing this, it forces the Offer unit to review the package to confirm the estimates are sufficient and avoids the premature return of the Offer.