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Exceeding Expectations. Always. — Business Advisors and CPAs

Offer-in-Compromise

BatesCarter recently completed an Offer-in-compromise in which the taxpayer settled a $200,000 tax bill for less than 1% of the amount owed.  This case involved both income and payroll taxes that had accumulated over a number of years.  As in most cases that are this successful we were able to prevail by digging into the details and presenting the taxpayer’s case in the most compelling fashion possible.
 
According to partner Rusty Hopkins, the percentage of cases accepted by the IRS has risen from 25% in 2008 to nearly 34% in 2011.  The number of OICs accepted in 2011 was 20,000 – 6,000 more than in the previous year.  In part this is the result of the IRS’s revisions to its Fresh Start initiative.  Changes to this initiative are designed to make the acceptance terms more liberal, especially in cases where the taxpayer is offering to pay in five or fewer months.
 
OTHER OIC NEWS:
 
More recently, the IRS has changed its“dissipated asset” approach to calculating a taxpayer's net assets.  Dissipated assets are generally assets that the taxpayer “would have had if they had been more careful with their money” and are counted as cash.  It is a one-sided argument that has come under increasing attack for being harsh and unproductive.  Although we still see these dissipated assets beingadded to the IRS’s calculations, we are now able to refute their inclusion in most cases, especially where the taxpayer has reduced their standard of living.
 
We believe that in the next few years the IRS will be more flexible in trying to resolve these issues to keep more taxpayers on the tax roles.