In the May 13, 2016 issue of e-News for Tax Professionals, the following news on the Offer in Compromise procedures has been circulated.
"Effective immediately, the IRS will return newly filed Offer in Compromise (OIC) applications in cases where the taxpayer has not filed ALL required tax returns. Any fees included with the OIC application will also be returned. This new policy does not apply to current year tax returns, if there is a valid extension on file."
Please make sure your clients have filed ALL required tax returns before attempting to submit an OIC package.
In the past, pursuant to Internal Revenue Manual 220.127.116.11.18 and Policy Statement 5-133, enforcement of delinquency procedures was applied for not more than six (6) years of unfiled returns. Enforcement beyond such period was not undertaken without prior managerial approval. The IRM 18.104.22.168.18 is still not updated since 08/04/2006, but we expect it to be updated soon in light of today's news. Or maybe not, since the update only concerns Offer in Compromise procedures.
We'll keep you informed once we get any other updates in the Internal Revenue Manual or regulations on the filing requirements procedures for OIC cases.
Posted at 05/13/2016 05:13:21 PM