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There are no international standards. The IRS IRM states “…standards are not available for international taxpayers or the U.S. Territories, except for housing and utilities in Puerto Rico. In the absence of standardized figures for foreign countries, a fair and consistent approach should be applied to what is allowed as living expenses for international taxpayers.” [...]
In terms of cancellation of debt (“COD”) income the answer is no. But if the terms of an offer in compromise are not fully met (including staying in compliance for a 5-year period subsequent to the offer) the balance of the compromised liability will be reinstated.
Typically our fees are based upon our standard hourly rates. Keep in mind that it may be difficult to extract information from tax resolution clients so charging on a fixed fee basis may be risky. Streamlined installment agreements typically begin at around $1,800 and offers may be over $10,000 depending on their complexity.
The answer to this question is both. The IRS will allow an installment payment amount based upon the taxpayer’s current ability to pay. If the taxpayers financial picture indicate he or she will have the opportunity to earn more going forward, the IRS will revisit the installment agreement payment amount in the future. If the [...]
Yes. Both Social Security and Medicare withholding are allowed.
For purposes of an installment agreement, the IRS will often allow higher than their standards. For an Offer in Compromise there are situations where the standards may be exceeded. They typically will allow higher than the out-of-pocket medical expense allowance if the higher amount can be substantiated. Be prepared to make the argument that there [...]
Assuming the couple has few assets or can liquidate their assets to make a partial payment, it makes sense for the couple to submit an Offer in Compromise. Based upon the information given, the couple has little or no income which will bode well to having an offer accepted will allow them to pay substantially [...]
The tax liability can be “argued” or more appropriately collected upon as long as the statute of limitations on collection (10 years for the IRS) is still open. If the amount of the installment payment is less than necessary to full-pay the liability over the collection statute (known as claiming "hardship"), the IRS will most [...]
Absolutely. When you submit an offer on behalf of a client you specify how the client will pay. A lump sum offer must be paid within 5 months of acceptance of the offer.
This is a good question. The answer is that the taxpayer has to be in a difficult situation that warrants accepting a relatively low amount. If the taxpayer has a large portion of the statute on collection remaining or appears to be able to earn substantially over the remaining term of the statute, the offer [...]
Yes. An offer will not be considered unless the taxpayer is in current compliance. This includes filing all tax returns to date and being current with the current year tax payments
Usually a taxpayer has at least a few assets (i.e. furniture, auto, etc.). In cases where a $0 offer may be warranted we opt to submit a very low dollar offer (i.e. $500-$1000).
Yes. Officially the “Fresh Start” program has ended but most of the changes implemented during the program still exist including relaxed rules necessary to qualify for an OIC.
The offer amount is calculated by multiplying 12 times the taxpayer’s monthly disposable income (“MDI” – take-home pay minus necessary and reasonable living expenses per IRS National and Local Standards) plus the quick-sale value of the taxpayer’s assets.
This is not necessary because a pending offer tolls (freezes) collection. However, you may want to contact the Revenue Officer assigned to the case (or Automated Collections ACS) and notify them that an offer has been submitted and ask that a hold be placed on collection activity until the offer is deemed processable.
Yes an OIC can apply to a business client but “in-business” offers are very hard to get accepted. There are usually more effective ways to deal with business clients.
We very rarely work for a fixed fee when preparing an OIC and when we do so we are very specific about the limitations described in our scope of work.
We do not use preparation software for offers. Each offer has intricacies that will be overlooked if using “out-of-the-box” software.
As you mention the IRS will allow the expenses for the client’s child if they are claimed as a dependent on the client’s tax return and will typically not if the child is claimed as someone else’s dependent. If this were my client I would have my client see if the ex-spouse would allow the [...]
Yes. Typically the spouse’s separate assets do not count toward the offer but the combined household income would for purposes of preparing the 433A-OIC.
Those commercials are suspect but we have settled liabilities for over $4 million for less than $5,000 and many lesser amounts using the IRS Offer in Compromise program.
Yes. One is a worksheet (Form 433-A OIC) and the other (Form 656) is the offer application
Yes. Either the company can submit an in-business Offer in Compromise if they remain in business (these are difficult to get accepted) or the individual/s assessed Civil Penalty stemming from the unpaid payroll taxes may submit individual offers.
