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IRS Tweaks Policy to Help People Settling Tax Debts Keep Refunds

Nov. 15, 2021, 4:20 PM

Certain individuals who have reached an agreement to pay off past-due taxes will be able to retain refunds that previously would have been kept by the IRS, the leader of the agency’s Taxpayer Advocate Service said Monday.

The Internal Revenue Service’s revised policy affects procedures related to offers in compromise—agreements that allow taxpayers to settle their tax debts for less than the full amount owed. Historically, the IRS would keep refunds—including interest—of taxpayers who owe money for tax periods extending through the calendar year in which an offer was accepted.

But beginning with offers accepted on or after Nov. 1, ...