During the final stages of an IRS Appeals Level of an OIC, I then received an audit for my 2015 corporate tax return. My personal side was settled and a figure agreed upon( took two years to get to this status). My question is “Does this mean that my OIC already negotiated will have to withdrawn?”
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5 comments on “Tax Question Of The Week: Who Knows The Answer?”
We need to know the Form of the Corporation. It it a Sub S or an 1120?
If it’s a Sub S, the OIC may be withdrawn.
TaxConnections has many people who contact us for help with tax questions and referrals to our tax members. This is the first of weekly questions that have come in from our site visitors we are putting out to our community. Thsu particular gentlemen told us his tax lawyer could find the code section that covers this issue. Do you know the answer?
I like Ben’s answer though it is possible that an audit of an S-corp will still result in a no change. I would not be concerned about it as you should have time to complete the offer payment terms before the audit is done and if you can pay off the audit year liability when it is determined, it should have no effect on the offer.
If you have a C-corp, it will have no effect. A corporation is its own person under the law and it is not you. Even if it owes, it does not impact you.
Benjamin,
I just sent your answer on to our site visitor who submitted this question and asked him to comment and answer your question back. This was a challenging question where they could not find the answer. Very good job!
Not unless you want to withdraw it. A withdrawal is a voluntary action on your part. The IRS Settlement Officer could reject it but unless he or she brings up the subject just shut up and lie low. If the examination results in any deficiency you would have to pay it promptly to remain in compliance. If you don’t the offer would be defaulted and the liability resurrected.
If you think there is likely be a deficiency and you know you don’t have the ability to pay it–after all the accepted offer should pretty much tap you out–you can make a case with the revenue agent that he or she should just close the case citing Internal Revenue Manual Section 4.20.1.2.1 (Examiner’s Responsibilities) which states: “Examiners should consider the overall collectibility of the return during the pre-contact phase as one of many factors in determining whether to survey the return or limit the scope and depth of examination.”
IRS does not want to waste its time auditing an empty pocket if it doesn’t have to. I made this argument on a case recently where there was already $85,000 outstanding in currently not collectible status and the examiner, an obvious newby, argued that the purpose of the audit was to determine the correct tax. Stunned that I knew her manual better than she did, she took my request to her manager who told her to audit someone else instead. My client eventually submitted an offer for $3,000 which was accepted.
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