USA When To Initiate an OIC

DTA93433

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1. Had a new client this year who had filed returns for "several years". Submitted a POA (2848) going back to 2006.

2. Pulled account transcripts going back to 2006. For tax years 2006, 2007, 2008 & 2010 returns were filed but taxes were deemed "uncollectible". 2009 is ok.

3. Client had NOT filed for tax years from 2011 to 2015.

4. Client needed to immediately file (for immigration purposes) tax years 2013 thru 2015 (this has been done). Years 2011 and 2012 are still due.

5. I advised the client regarding the 10 year statue of limitations IRS has in collecting back taxes.

Client has received CP503 notices now for tax years 2006, 2007, 2008 & 2010.

Question: Since tax years 2011 and 2012 are STILL not filed, I understand that this needs to be done before we can submit an OIC. Client has also started a non-profit in 2016. I no of no delinquent filings/taxes due in regards to the nonprofit.

Other than filing returns for 2011 & 2012, anything I need to be aware of before submitting an OIC? Can we file once the returns have been processed?
 
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You can file once they have been submitted, but you might want to look at the CSEDs. Were the older returns filed timely and the 10 year statue is almost up (all were filed by taxpayer and not SFRs, right?)? If he is not in an OIC, does full pay IA for now work better, or maybe a PPIA (because those do not extend CSED) make the client pay less over time .. it all depends on the amounts owed, but should be looked at. Also, is client going to stay compliant, an OIC will suspend the CSED, and if client misses a payment OIC may be voided and now they will have lots of into to use to collect. Any voluntary payments client makes while working things out -- make sure to write most recent tax year ON THE CHECK.
 

DTA93433

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I've checked the CSED's. All delinquent returns have now been filed. I've gone back and forth between an OIC and a streamlined OPA (which the taxpayer would be eligible for). I'm not familiar with PPIA (partia-payment)?? About a quarter of the taxpayer's overall liability will lapse (via CSED) in March 2018. I'm thinking of initiating an OPA. We can then alter the overall payment amount in the future to reflect the reduced overall liability amount. OIC's currently (as of 2015 data) only have a 40% success rate. Spoke with the Practitioner Priority Service. They were unaware in regards to how payments would be applied. Is there a way (in preparing an OPA) to have payments posted to current year(s) first?
 
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You only need to file last six year's returns, so you good there. The CSED analysis was to see if most debt would go away by just making payments until statute expires. I think unless the client is absolutely broke and has no assets with any equity, no income, etc., (where the OIC is likely to get accepted), then instead you do a OPA (or a PPIA - partial payment installment agreement, basically it will not full pay tax in full, but it is all you can pay based on monthly income analysis and it will keep levy and collections at bay. If the current years have a lot of tax due, then maybe OIC is way to go. NO, unfortunately you cannot designate any payments "required" to be made (via an installment plan of any kind, except the very first payment because that one is voluntary). The IRS will ALWAYS apply to the oldest year first.
 

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