Vince Nardone: Tax and Controversy

Offer-in-Compromise - You must file your returns

No matter how many times we tell the client, many taxpayers fail to follow through with the express conditions of the Internal Revenue Service's collection alternatives.  In Trout, (2008) 131 TC No. 16, the taxpayer entered in an Offer-in-Compromise ("OIC") with the Service.  For those of you who do not know, an OIC is simply a settlement with the Service to pay less than the full amount due.  Although it sounds simple, many taxpayers do not qualify because of the rigid requirements of the OIC and the fact that the Service does not like the OIC program.  But, it is amazing how many times taxpayers, who are initially successful with entering in an agreement with the Service, fail to follow the Service's express conditions of the agreement.

In this case, the Service agreed to accept the taxpayer's OIC if, among other things, the taxpayer filed timely tax returns for the five years following the acceptance of the offer.  Yet, the taxpayer failed to file the returns on time.  Rather than correct the error immediately and plead to the Service's discretion for leniency, the taxpayer continued the delinquency and then attempted to come up with some creative (but baseless) legal arguments in challenging the Service's revocation of the offer.  This is one of those cases where you scratch your head and wonder why such a case should be litigated.  The fact is the Service accepted the taxpayer's offer on the express condition, among others, that he must file his returns on time.  Yet, he failed to do so and the Service revoked the OIC.  Sounds easy enough for me.  But yet, it was litigated.

See the case attached.  Download OIC - Breach

Offer-in-Compromise - You must file your returns

No matter how many times we tell the client, many taxpayers fail to follow through with the express conditions of the Internal Revenue Service's collection alternatives.  In Trout, (2008) 131 TC No. 16, the taxpayer entered in an Offer-in-Compromise ("OIC") with the Service.  For those of you who do not know, an OIC is simply a settlement with the Service to pay less than the full amount due.  Although it sounds simple, many taxpayers do not qualify because of the rigid requirements of the OIC and the fact that the Service does not like the OIC program.  But, it is amazing how many times taxpayers, who are initially successful with entering in an agreement with the Service, fail to follow the Service's express conditions of the agreement.

In this case, the Service agreed to accept the taxpayer's OIC if, among other things, the taxpayer filed timely tax returns for the five years following the acceptance of the offer.  Yet, the taxpayer failed to file the returns on time.  Rather than correct the error immediately and plead to the Service's discretion for leniency, the taxpayer continued the delinquency and then attempted to come up with some creative (but baseless) legal arguments in challenging the Service's revocation of the offer.  This is one of those cases where you scratch your head and wonder why such a case should be litigated.  The fact is the Service accepted the taxpayer's offer on the express condition, among others, that he must file his returns on time.  Yet, he failed to do so and the Service revoked the OIC.  Sounds easy enough for me.  But yet, it was litigated.

See the case attached.  Download OIC - Breach