The Ultimate Guide to IRS Offers in Compromise in 2021

Taxpayers who owe taxes to the Internal Revenue Service have a couple of recourses to handle their debt. While many benefit from installment agreements, taxpayers whose tax debts far exceed their incomes and ability to pay may not find these types of solutions feasible. Taxpayers who are unable to repay what they owe to the IRS might benefit from a different program called an Offer in Compromise.

What is an offer in compromise?

The IRS offer in compromise is a program through which the IRS allows taxpayers to settle their tax liabilities for less than what they owe. The authority to accept less than what is owed is granted by 26 U.S. Code § 7122. Under this statute, taxpayers may submit lump-sum offers in compromise to settle their tax debts through a lump-sum payment or periodic payment offers in compromise to settle their liabilities through a finite number of periodic payments. If a taxpayer submits an offer in compromise to the IRS for a lump-sum, he or she will be required to submit an initial payment with the offer. People who submit periodic payment offers in compromise must submit the amount of the initial periodic payment with their offers.

Under IRM 5.8.1, the IRS will accept an offer in compromise when it deems the tax liability to be otherwise uncollectible. It may also agree to an offer in compromise when there is doubt about the liability owed and to support the effective administration of taxes. The goal of the OIC program is to negotiate a legal payment agreement that is in the taxpayer’s and IRS’s best interest.

Doubt about Collectibility

The first ground for approving an offer of compromise exists when the IRS doubts its ability to collect the tax debt because of the taxpayer’s financial inability to pay the full amount owed. Doubt about the collectibility of tax debt may be shown when a taxpayer’s income and assets are insufficient to satisfy the full tax liability. this is the most common ground for making an offer in compromise. Some taxpayers who submit offers in compromise for tax debts that are deemed to not be collectible can settle their liabilities for a fraction of the total owed. Under IRC § 7122(d)(3)(A), the IRS must not deny an offer in compromise when their denial is solely based on the amount that is offered.

Under IRS Policy Statement P-5-100, the agency will accept … Continue reading

How to Have Your Best Tax Prep Season Ever in 2021

For many years, my rallying cry has been “no more filing season”.

Yep, I’m one of the people that goes against the grain, and reminds you that there are other things you can be doing with your time other than grinding through tax season.

Personally, I chose to completely eschew tax season when I was in practice, and focused solely on tax resolution. Full time, year-round, nothing else.

That’s my personal philosophy about it. But, I’m a very pragmatic person, and I totally understand that such a message just isn’t going to resonate with the majority of tax professionals. For many in our profession, filing season is just so heavily ingrained into their psyche, that they can’t fathom NOT participating in filing season — and just never going to change that.

I totally understand that.

So, this year, I’m going to take a different angle on this: If you’re going to “do” filing season, choose to do it better.

Plenty of tax professionals have easy-going filing seasons. They work 40 hours a week or less, not 90. They don’t miss their kids’ events. Their marriage doesn’t suffer for 3 months a year. And they still generate plenty of income.

Fairy tale? Not at all.

Since this isn’t at all my area of expertise, I’ve arranged with my good friend Salim Omar, CPA to share with you his amazing system for creating genuinely ENJOYABLE filing seasons in your tax firm.

Salim is well versed in what it’s like to have miserable filing seasons, but several years ago he made specific choices to totally turn around his tax firm. It really is fascinating to read how about Salim got from where he was (which included being up to his eyeballs in debt), to where he was running a smooth, systematic tax prep business. You can read about this transformation by clicking here.

Consider, for a moment, what your life would be like if you had a tax firm that:

  • Runs like a well-oiled machine WITHOUT YOU.
  • Pumps out profits during tax season like never before without you working like an insane person.
  • Attracts the clients YOU want (not just “more clients”).
  • Has more self-driven, competent, confident staff (with very little babysitting from you).
  • Easily gets clients SAYING YES to your services, regardless of the fees.
  • Has clients that refer, so that you’re not wasting time and money on advertising.

You have an AMAZING opportunity in … Continue reading

Every Tax Firm Owner Should Have a “Default” Marketing Task

If you’re never caught up on client work, and always have more on your plate than you can handle, then today’s email might not make a lot of sense.

But even if you’re busy beyond belief, you always need to be doing marketing. Always, always, always.

Why? Because it’s what breaks the proverbial roller coaster, boom/bust cycles of revenue. If you’re always doing some lead generation marketing, you’ll always be filling your funnel and building out your pipeline of future business.

This is particularly true with project-based services, such as tax resolution. You need to always have some sort of tax resolution marketing going if that’s a focus for your practice — which it is, or else you wouldn’t be reading this. Huzzah!

So remember last week, when I educated you on the fact that you need to spend at least three hours a week doing marketing? And to block that time out on your calendar no matter what? Here’s that post.

Well, later in last week we went through that detailed exercise to define your action steps. But what if you didn’t do that exercise? Tsk, tsk. You should. But, at the same time, I realize that many readers just never will.

So then, what do you fill your three hours of marketing each week with?

Or, heaven forbid that you have any downtime from client work, what should you fill the time with? Honestly, if you have down time from client work, then you need more client work — so you should do marketing!

Well, I believe that every tax practice owner should have a default marketing task that they do when they have any sort of down time, or don’t know what else to fill their marketing time with.

It should be a task that you can start and stop at will. Something you can fill short time slots with. And it definitely needs to be something that directly moves the needle in terms of revenue.

When I first went into private practice in late 2010, my default marketing task was telemarketing. Since I had no clients when I just started out, I had nothing else to do all day except marketing. Sure, I spent some time each day on my Google Adwords campaigns and direct mail, but my default marketing task, the thing I spent most of the day doing, was cold calling.

Yes, cold calling sucks. But I … Continue reading