February 6, 2022 - Douglas Myser

Changes to Offer in Compromise part one. What is now known as the IRS Fresh Start Program used to be called the Offer in Compromise. The IRS has made some changes due to Covid's impact on the pocketbook's of taxpayers. An Offer in Compromise allows taxpayers to settle their tax debt for an amount that is less that what they originally owed. It is calculated based on a formula of assets and disposable income paid over a period of time. This newest change effective November 1st, 2021, the IRS has changed policy, allowing taxpayers to keep their tax refunds once the IRS accepts their OIC's and enables certain taxpayers to seek Offset Bypass Refunds, or OBR's, while their OIC's are pending consideration by the Internal Revenue Service. Changes to Offer in Compromise part one.

The Taxpayer Advocate Service and the Internal Revenue Service had discussions on two changes to the Offer in Compromise program, given the Covid pandemic and ongoing concerns over current conditions of taxpayers. First, for offers accepted on or after November 1, 2021, the offer in compromise refund recoupment process will no longer be applicable for tax periods included on the form 656. And second, while refunds may still be offset during the time an OIC is pending, the IRS agrees that taxpayers may seek an Offset Bypass Refund during this period, where warranted by contacting the IRS. Once accepted by the IRS, it becomes a legal agreement binding the taxpayer and the government to a settlement for an amount less than what is legally owed. A TC 780 is placed on the taxpayer's account on the IRS records to show the date the offer was accepted.

However, after November 1, 2021, the IRS will no longer offset, or recoup refunds for the calendar year in which the Offer was accepted. It will no longer apply that refund to the outstanding tax liability for the years included in the Offer agreement. If this seems complicated you should contact a Tax Resolution Company 1-888-689-7861. We are a leader among Tax Resolution Companies and can make Tax Resolution stress free for you. Call for a free Tax Resolution Services consultation today. We are a Nationwide firm.