Offer In Compromise Effective Tax Administration
Negotiating an offer in compromise effective tax administration requires a skilled professional negotiator. This is not a project for either the tax payer or someone new to IRS representation to handle.
Handled correctly, however, it is an effective way to reduce your IRS debt.
Failure here, though, means you will pay more and risk having your back account and paycheck levied and property seized.
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Effective Tax Administration – Get Your OIC Accepted!
Most offers are filed based on the taxpayer’s ability to pay.
Usually, health and age play a small role in deciding whether or not the taxpayer can pay the amount each month that is decided upon.
Less often used are offers that are based on doubt as to liability. When there is doubt that the liability is owed by the taxpayer then the IRS may also settle for less.
In more recent years, the IRS added another category, called “effective tax administration”.
Here they take into account whether or not it is practical, probable and in keeping with public opinion to continue to collect large amounts of tax from someone who is in very poor health, or elderly and not able to work.
The taxpayer may have sufficient equity in their home to pay the tax. But if they lose their home, they won’t be able to afford rent. Or they may have no collateral for loans to pay for medication and doctors’ bills.
If requiring full payment would create an economic hardship, then this may be the type of offer to file. The assets that would cause the hardship is isolated or removed from the offer request.
Success of an Effective Tax Administration Offer
The IRS has been rejecting these type of offers from what I hear. I’ve only done a few of them. One was turned down. We were told that at age 52 the taxpayer could use his advanced degree and work to pay off the liability.
Sometimes depression as an illness is not widely accepted. I again remembered that resolution is at the discretion of the IRS and sometimes my opinion is the same as theirs.
If this type of offer fails, an installment agreement must be set up.
I would set up the most minimal monthly amount, such as . Then upon timely payment of this and any tax liabilities as accrued, the taxpayer will have an indefinite agreement. A currently not collectable (CNC) agreement may work for a while, but it will invite the IRS back for reconsideration later on.
We are available to help you make the right choices when dealing with the IRS.
If you are considering hiring us, call Joe Mastriano, CPA 713-774-4467.
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