Will IRS settle a tax problem by combining the four (4) years together or will client have to settle each year separately?

[Donnak]

New client has not filed tax returns for the last four (4) years.  Best guess is that he will owe between $10,000.00 and $15,000.00 in taxes.  If IRS accepts his Offer in Compromise, will they combine the amounts owed in one settlement and charge him one fee or will he have to settle each year separately and pay the IRS fee for each year? 

[itonewbie · Accepted solution]

Before an OIC can be considered, all delinquent returns must first be filed and registered on the IRS' system (among various other requirements).

One application can be submitted with one user fee to cover multiple years.  It wouldn't make a difference whether the offer covers one or multiple years.

The IRS is required, pursuant to §301.7122-1, to assess the offer based on various factors, including your client's ability to settle any outstanding tax debts in consideration of their income and assets.  One purpose of OIC is to help the IRS collect outstanding taxes that may otherwise be at risk and suspend the statute of limitations for collection.  As you may be aware also, the statute of limitations does not start to run until the delinquent returns are filed.