Martin Cantu, EA - Tax Consultant - Tax Relief Services Blog

 Chapter 5 How to appeal the IRS when your offer in Compromise is Rejected.   Take One Last Chance at the Offer Specialist Level   Don't Fall For the Misleading Commercials! Lately I’ve seen a commercial on various social media outlets touting IRS Debt Relief, The Fresh Start Initiative and an Offer in Compromise. The commercial illustrates a taxpayer settling a large tax debt for $100. For the record, the only way to accomplish this is to be out of a job, with not job prospects, and living on the edge of homelessness – it’s all a fiction and does a real disservice to educate taxpayers as to how this process work. Set reasonable expectations for yourself – if you live in an expensive house, send the kids to private school, have late model cars, season tickets to local sports team and vacation two or three times a year – it isn’t going to happen for you.   An IRS Settlement Officer (SO) is a trained professional who is responsible for evaluating and negoti...

  Chapter 4 – Filing Details/Payment Terms/Important Consequences IRS FORM 656 – OFFER IN COMPROMISE Use IRS form 656, Offer in Compromise to submit your offer. You can access the form via this link .   Be sure to read the accompanying booklet. Note that there are different forms of Form 433, Collection Information Statement, that are a part of the submission process. Form 433-A is for use by Wage Earners and Self-Employed Individuals. Form 433-B is used by Businesses. Also note that there is a specific form, 656-L, for use if you are claiming doubt as to liability. The IRS site also has a pre-qualifier tool. But don’t get too upset if it reports that you are not eligible. The tool does not take into account any special circumstances or other issues that may be relevant to your situation. Please refer back to this section of my Blog for a more detailed discussion of this issue.   Who Can File An Offer? An Offer in Compromise (OIC) can be filed by any individ...

  Calculating the Amount of your Offer in Compromise – What is Your Reasonable Collection Potential (RCP)? Drum roll please! This is what you’ve been searching for – how much do I offer? How little can I get away with? Why not low ball them?   Here are the two most important concepts to understand before you start your OIC.   Key Point 1 - You’re not buying a car or a house. The Settlement Agent does not work on commission. They don’t have to settle and the decision to settle rests entirely with the Settlement Officer. Any offer or counter-offer you make has to be backed up by the numbers.   Key Point 2 – Determine your Reasonable Collection Potential before making an offer. Reasonable Collection Potential (RCP) is a key factor considered by the IRS when evaluating an Offer in Compromise (OIC). RCP refers to the amount of money the IRS believes it can collect from a taxpayer based on their assets, income, and future earning potential.   The IRS...

  OFFER IN COMPROMISE: THE PROCESS FOR MAKING AN OFFER   “… (the IRS) OIC program that is itself full of compromises, as the needs of the tax system as a whole are balanced against the needs of the individual taxpayers.” Professor Bryan Camp, Lessons From the Tax Court: The Concept of Reasonable Collection Potential, August 16, 2021.       General Overview Prior to getting too far into the weeds here, you as the taxpayer should keep in mind that an Offer in Compromise is not the only way to resolve your tax debt. An Enrolled Agent, taking all the factors into account, can assist you with alternatives. Going through the OIC, even if the offer is not accepted, can identify other potential avenues for resolution. An Enrolled Agent specializes in this role. The process of submitting an Offer in Compromise (OIC) to the IRS can be complex and time-consuming. Here is a general overview of the process: ·          ...