Offer in Compromise Staff at IRS - Intentionally Confusing Taxpayers?

The Offer in Compromise process usually involves a preliminary analysis by the IRS in which they do a rough calculation of the financial statement and send the taxpayer an idea of what they accept - which usually amounts to a REJECTION!

We are finding that this REJECTION is usually based on two WRONG calculations: 1) the IRS multiplies the taxpayers disposable income by 120 months OR by the time left in the collection statute. This is WRONG and seems to be an intentional deterrent to discourage people from seeking an Offer. The actual well-known calculation of disposable income is: 48 months! When our staff is preparing the appeals on these preliminary rejections: we make sure to remind the IRS of their own guidelines and they seem to be conceding to them.

Extensions to Full pay the IRS

IRS Automated Collection Systems used to allow taxpayers 120 days to full pay their debt. But due to abuse, they have narrowed it down to 60 days (which you can renew to another 60 days if you call). Interesting trend: when clients have defaulted their promise to full pay, I am finding that the IRS is NOT very quick at getting them back into collections. I can't say that I NOR my clients are complaining. I will see if this trend holds up and report about it later!

IRS levies and seizures are up!

You would think that with the sliding economy and home foreclosure nightmare that the IRS might give home seizures a rest. Nonetheless at Washington Tax Services, we are seeing an increase in IRS moves to seizure. Horrible? Yes. Preventable? We think so. There are a few delay tactics that can be used including 1) requesting an appeal hearing and furthermore 2) coming forward with a financial statement and a different plan to resolve the tax debt.

Jay Freeborne, Enrolled Agent, Washington Tax Services, March 13, 2008 , 866 525 7302