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Question regarding Offer in Compromise $150 fee

Hello,

I've looked all over for an answer to this but with no success. The IRS can't give me a straight answer on this either. I though the issue might have come up in this group before but it doesn't look like it.

Simple question - if I submit a client's Offer in Compromise - they pay 20% of the balance and the $150 fee with the Offer, but the Offer is ultimately rejected - i.e., it's not enough, something is missing, etc., etc. and it ultimately never gets granted, does the $150 fee get applied to the client's IRS liability? I know that the IRS will generally keep both payments regardless of what happens, and I know that the balance payment will get applied to the liability, but what about the $150 fee? Is it just lost forever with no benefit whatsover if the OIC is never granted?

Reply to
caj111
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See page 12 and 13 of the form 656 booklet for the answer.

C. The application fee can only be returned to you if the IRS determines that your offer is not processable. If your offer is determined to be not processable (see Page 2 for the 3 processable require­ments), the IRS will return your application fee.

However if your offer is determined to be not processable and you have made either the 20% initial payment for Lump Sum Cash offer, or the first initial installment for the Short Term Periodic Payment Offer or Deferred Periodic Payment Offer, these payments will not be refunded to you. They will be applied to your outstanding tax liability and your offer will be returned to you as not processable.

D. If your offer is determined to be processable and later in the investigation, the offer is returned, rejected, or withdrawn, the application fee and payments will be applied to your outstanding tax liability.

Reply to
Alan

That should have said Form 656-B Booklet.

Reply to
Alan

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