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Can I Get My Tax Return Back?

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Ohio

I owe a back federal tax amount for 2017. I currently have an offer in compression processing. According to the agent I spoke to who evaluated it initially, she said it's very likely it'll get approved (especially if she is the one assigned to it). However, I filed my 2019 taxes and my return was immediately applied to that past-due balance.

My questions is; if this balance is forgiven and I'm allowed to do the offer in compromise, shouldn't I be entitled to petition to get that tax return back? Since it was applied to a balance that is no longer valid? And if so, how would I do this?
 


Zigner

Senior Member, Non-Attorney
Ohio

I owe a back federal tax amount for 2017. I currently have an offer in compression processing. According to the agent I spoke to who evaluated it initially, she said it's very likely it'll get approved (especially if she is the one assigned to it). However, I filed my 2019 taxes and my return was immediately applied to that past-due balance.

My questions is; if this balance is forgiven and I'm allowed to do the offer in compromise, shouldn't I be entitled to petition to get that tax return back? Since it was applied to a balance that is no longer valid? And if so, how would I do this?
You're looking for the tax refund. The return is the document you file and the refund is the money you get back

EDIT: I'm tagging a tax attorney to review this: @Taxing Matters
 

LdiJ

Senior Member
Ohio

I owe a back federal tax amount for 2017. I currently have an offer in compression processing. According to the agent I spoke to who evaluated it initially, she said it's very likely it'll get approved (especially if she is the one assigned to it). However, I filed my 2019 taxes and my return was immediately applied to that past-due balance.
I think that you meant "Offer in Compromise" rather than "Offer in compression".

My questions is; if this balance is forgiven and I'm allowed to do the offer in compromise, shouldn't I be entitled to petition to get that tax return back? Since it was applied to a balance that is no longer valid? And if so, how would I do this?
A tax return is the document you e-file or mail to the IRS. A refund is the money you get back from them.

No, you will not get that money back. While you have tax debt outstanding, any refunds you were entitled to receive will be put towards that debt. There simply will be less for them to forgive.
 

Taxing Matters

Overtaxed Member
My questions is; if this balance is forgiven and I'm allowed to do the offer in compromise, shouldn't I be entitled to petition to get that tax return back? Since it was applied to a balance that is no longer valid? And if so, how would I do this?
The balance is still valid until the offer in compromise (OIC) is accepted by the IRS. While the IRS will suspend collection actions while the OIC is pending, it will still offset refunds from other returns you file for tax years up to and including the tax year in which the OIC is accepted. Thus, if the OIC is accepted in 2020 and you file a refund return for 2020, that refund goes to the IRS, too. You won't get that 2019 refund back, and if you get a refund for 2020 and for some reason the IRS does not offset it, you'll be obligated to return it. This is all part of the terms you agreed to when you signed and submitted the Form 656 to apply for the OIC. It states in Section 7, Offer Terms, paragraph (e):

e) The IRS will keep any refund, including interest, that I might be due for tax periods extending through the calendar year in which the IRS accepts my offer. I cannot designate that the refund be applied to estimated tax payments for the following year or the accepted offer amount. If I receive a refund after I submit this offer for any tax period extending through the calendar year in which the IRS accepts my offer, I will return the refund within 30 days of notification. The refund offset does not apply to offers accepted under the provisions of Effective Tax Administration public policy/equity or Doubt as to Collectibility with special circumstances based on public policy/equity considerations.
 

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