"JanZtax" <janztax[at]aol.com> wrote:

- quote -

(`h) The IRS will keep any refund, including interest due to the taxpayer
because of overpayment of any tax or other liability, for tax periods
extending through the calendar year that the IRS accepts the offer. The
taxpayer may not designate an overpayment ordinarily subject to refund, to
which the IRS is entitled, to be applied to estimated tax payments for the
following year. This condition does not apply if the offer is based on Doubt
as to Liability.

So, not only can she not apply it to the offer, she won't
get it anyway. Sorry.

Bryan

--
-------- Bryan Kellar, EA
Oregon Tax Help, Inc. Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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JanZtax wrote:

- quote -

Jan, you're right on both counts. Even if you could get an
offer submitted AND accepted before the 1040 were filed,
"they" would take that into account, as they should of
course.

Cheer$,
Harlan Lunsford, EA n LA

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"JanZtax" <janztax[at]aol.com> wrote:

- quote -

The OIC instructions, as I recall them, are pretty clear -
the IRS gets to keep the refunds from the current and
subsequent year as long as they don't cause the total of all
the payments to exceed the actual amount of the debt. So for
instance, if your client owes $10,000 and the IRS accepts an
OIC for $2,500, the IRS can and will keep the $5,000 refund.
However, if the client owes $10,000 and the IRS accepts an
OIC for $8,000, then the IRS can only keep $2,000 of the
refund and must return the remainder.

Gene E. Utterback, EA

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- quote -

Jan, if she has the ability to pay the 10K in the next 5
years, your OIC will have a snowball's chance of getting
thru.

And with a 5K refund, I'm going to assume she does.

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org

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Let me say first of all that I've never done an offer in
compromise. I will be doing one soon (client knows I'm a
"virgin"!) for a client who owes about $10,000 from prior
years. Here's my current question (I'm sure more will arise
later!):

Client is currently on an IRS installment plan which she is
not paying regularly. For some strange reason, she's getting
$5,000 refund on her 2003 return which is on extension
(strange because, although she just has a w-2, she has owed
the last few years.)

I want to know if the IRS will automatically take the full
$5,000 refund to satisfy the $10,000 debt (I assume they
will) and, if yes, can I submit the OIC before the 2003
return and somehow have that $5,000 refund count as "the
offer". My guess is "no" but I'm wondering if there's any
way around this refund being taken entirely.

TIA, Jan Zobel EA

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