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

  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: ·          ...

  I’ve spent some time researching Offers in Compromise lately, especially the provision providing for an OIC under the “ Doubt as to Collectability with Special Circumstances” (DATC-SC) provision. As I’ve researched OICs in general and the DATC exceptions specifically, I’ve began to see some parallels with baseball. Stay with me for second. First, and on a purely unscientific basis, my bet is that many tax pros are also baseball fans. Further, I sense a close affiliation with the new baseball metrics and the willingness to wade into the tax code on   regular basis. For those non-baseball fans, the Michael Lewis book and the movie Moneyball demonstrates the value of a baseball grinder versus that of high money free agent that a team will overpay for years and years.   Its about looking at the numbers and not what your eyes tell you. Quoting the Billy Beane, the subject of the book and movie, “We are card counters at the blackjack table, and we’re going to turn the odds...

An IRS Offer in Compromise is a great tool available to some taxpayers, allowing them to pay the IRS back less than the full amount they owe. Sounds great.   You heard the commercials on the radio and on TV - XXX National Tax Relief Firm can reduce your taxes! Call now and take advantage of the IRS Fresh Star Initiative! (Author's note here - I probable hear more commercials for IRS tax relief on my satellite radio since I specialize in IRS Offers in Compromise and Audit Representation and many of my internet searches is on these tax related topics. I now fully appreciate the phrase "app would like to share your information to make your experience more enjoyable").   The Fresh Start Initiative is approaching middle age and the IRS financial standards are just not keeping up with our current national financial situation, or even that here in the Austin/Round Rock area where rents are up, and home prices are falling.   By way of background, please visit my deepe...