Offer in Compromise – New Rules, Settle for Less – Former IRS Agents
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I am a Former IRS agent and teaching instructor with the IRS. I taught tax policy to new IRS agents. I know all the rules, settlement policies and tax procedures to make a offer work if you are a qualified candidate.
We are comprised of Tax Attorneys, CPA’s and Former IRS agents, managers and instructors. We have over 205 years of total tax experience and over 60 years of direct work experience with the IRS.
We know all the settlement policies and tax strategies of the offer in compromise.
The settlement game has changed.
The Internal Revenue Service is now in the business of accepting offers in compromise. Even though IRS has been accepting them for years they now “really” want the offers to settle cases simply because the FEDS need money.
As a Former IRS agents I can tell you first hand in the past the IRS agents did not like working offers in compromise. They took to much time and they were a lot of work and they were reviewed by the higher ups. Management would criticize your work so it was easier to find a reason to reject the Offer. In day pasts the motto was,” reject immediately”. The culture has changed and we are starting to see a major shift in settlement policy.
Expanded Offer in Compromise Program
The IRS has expanded its “Fresh Start” initiative by offering more flexible terms to its Offer-in-Compromise Program. These newest rules enable some financially distressed taxpayers to clear up their tax problems even quicker.
An offer-in-compromise is an legal and enforceable agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement.
The IRS primarily looks at the taxpayer’s income and assets to determine the reasonable collection potential. They generally add the assets of the taxpayer with the net disposable monthly income times 12 to arrive at the settlement formula.
This expansion of the “Fresh Start” initiative focuses on the financial analysis used to determine which taxpayers qualify for an OIC.
Here are the BIG OIC changes:
Revising the calculation for a taxpayer’s future income
The IRS will now look at only one year instead of four years of future income for offers paid in five or fewer months and two years instead of five years of future income for offers paid in six to 24 months.
All OICs must be paid in full within 24 months of the date the offer is accepted. This is the very best way of getting an offer accepted.
IRS is now allowing taxpayers to repay their student loans.
Minimum payments on student loans guaranteed by the federal government will be allowed for the taxpayer’s post-high school education.
Proof of payment must be provided.
Allowing taxpayers to pay state and local delinquent taxes.
When a taxpayer owes delinquent federal and state or local taxes, and does not have the ability to fully pay the liabilities, monthly payments to state taxing authorities may be allowed in certain circumstances.
Expanding the Allowable Living Expense.
Allowance standard allowances incorporate average expenses for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer-in-compromise requests.
The National Standard miscellaneous allowance has been expanded. Taxpayers can use the allowance to cover expenses such as credit card payments and bank fees and charges.
Call us today to see if qualify for a offer in compromise, free tax consults.
