- Instructor: Attorney Bob Schaller
- Lectures: 2
- Quizzes: 1
The IRS keeps any tax refund emanating from overpayment of any tax or other liability due through the calendar year the IRS accepts the taxpayer’s offer. Form 656, Section 7(e), https://www.irs.gov/pub/irs-pdf/f656b.pdf. The IRS will keep any refund, including interest, for tax periods extending through the calendar year that the IRS accepts the offer. Form 656 Booklet, pg. 1, https://www.irs.gov/pub/irs-pdf/f656b.pdf. For example, if a taxpayer’s offer is accepted in 2019 and the taxpayer files the 2019 Form 1040 on April 15, 2020 showing a refund, then the IRS would keep the tax refund and apply the refund amount to the taxpayer’s tax debt.
Form 656 contains a term which waives refunds and overpayments for all tax years through the year the Offer in Compromise is accepted. IRM § 18.104.22.168(1) (10-04-2017). This waiver is a standard term, which cannot be altered. IRM § 22.214.171.124(1) (10-04-2017).