A Tax Professional’s Guide to IRS Offers in Compromise

Tax debtors have numerous options available to them for resolving their unpaid tax liabilities. While the vast majority of tax debtors will be placed into an appropriate Installment Agreement or into Currently Not Collectible (CNC) status, the Offer in Compromise program provides an amazing opportunity for taxpayers to start fresh with the IRS…if they qualify. In this post, we explore the ins and outs of the Offer in Compromise program from a taxpayer representative’s point of view.

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 … Continue reading

Podcast Episode #16: The First $2500: How To Find Your First Tax Resolution Client with Jassen Bowman

Jassen Bowman discusses his path from being bankrupt and homeless to being a globe-trotting adventurer living the proverbial “4-Hour Workweek” digital nomad lifestyle as a specialist serving only tax resolution clients. He also shares the #1 “secret” to a highly profitable tax resolution firm, and shows you the three most important marketing strategies that you should be using to attract clients if you currently have little or no money in the bank to spend on marketing.

To start your 7-day free trial of Tax Resolution Academy® membership, go to: https://TaxResolutionAcademy.com/join.… Continue reading

Highlights of the Latest COVID-19 Economic Stimulus Bill

On December 27, 2020, the President signed into law the House Amendments to the Senate Amendments to bill HR 133. The original HR 133 was a US-Mexico trade pact, but after months of political tinkering, amendments in both chambers, and having numerous other bills stuffed into it, became a 5,593 page monster of a bill. Tucked within it are the complete federal spending appropriations for Fiscal Year 2021, the latest COVID-19 economic stimulus effort, and numerous additional items.

Here are some of the highlights from this massive piece of legislation:

  • Federal unemployment benefits will be extended, with an extra $300 per week bonus benefit added on.
  • Individuals may be eligible for a direct payment of up to $600 per person, subject to income limitations.
  • A second round of PPP loans have been authorized for businesses that experienced a 25% or greater decline in any quarter of 2020 over the same quarter in 2019.
  • PPP loans under $150,000 will effectively be given rubber-stamp forgiveness via a 1-page application and self-certification of forgiveness eligibility.
  • Recipients of EIDL grants no longer need to subtract the grant amount from their PPP forgiveness amount.
  • Business expenses paid with PPP funds and EIDL grants are fully tax deductible, and forgiven PPP loans amounts and EIDL grants are not included as income.

There are many additional provisions in this lengthy bill, of course, but these highlights should give hope to many struggling individuals and small businesses. To learn more about the provisions of this bill that can help your family or business, search our directory of tax firms to find a tax professional near you for assistance.… Continue reading