When to file a clients tax return with a refund due

[Christopher Carmona]

I am preparing an OIC or PPIA and the client has not filed their 2018 tax return (they are on extension until October). They owe about 68,000 for 15,16,& 17.

Should I try to obtain an OIC before they file the 18 return and then they can be refunded the amount due to them? This doesn’t seem right but I thought I’d ask anyway.

Should I try to obtain a PPIA before they file the 18 return and then they can use the refunded money to pay it off over time? This doesn’t seem fair either.

Or should I have them file the 2018 return first, thereby applying the refund to the balance due and then negotiate an OIC or PPIA on the lower balance?

Thank you,

[Barbara Brown]

Please see the Forum post on Compliance and Extensions for some information on extensions where OICs are involved.

There’s also a fairly recent article that discusses OIC vs PPIA at https://taxfortress.com/partial-payment-installment-agreements-irs/

Hope this helps.

[Charles Zagara]

The IRS will keep the 2018 refund if they grant an OIC. If your client is in any form of IA then they will keep the 2018 refund and apply to the oldest balance (the balance closest to the CSED). The OIC examiner will want the 2018 return filed and the taxpayer in filing compliance before granting an OIC. In any event the taxpayer is not going to receive their 2018 refund.

[Eric Green]

I agree with Charles, it is a term of the Offer if you read the 656: they agree, as part of their offer, to give up any refund in the year the offer is accepted.

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