Occasionally clients will come into my office. They have tried by themselves or the help of someone else to set up payment arrangements. Sometimes they have their family attorney try and set up an installment agreement only to get denied. Other times they try to file their own OIC or Offer in Compromise. I cannot stress enough what a bad idea this is. Would you let your plumber fill a cavity? Would you perform open heart surgery on a friend? No, of course you wouldn’t. The answer is clear in those cases but to taxpayers somehow the necessity of using a tax attorney to resolve your IRS matter escapes them. In my opinion less than 5% of the OIC’s that are self-submitted get accepted. Compared to attorney led attempts which result in much more favorable outcomes. I estimate our firm’s rate to be closer to 98% of acceptance into OIC Programs. Often times the rejection is not the worse part. Filing on your own or without the help of an experienced tax attorney can make your chances of getting into a settlement much harder. With that being said all is not lost. Even if you have been turned down in the past the IRS is now more than willing to settle your tax debt.
Who can get an OIC?
If you are a taxpayer with a liability over $10,000 or more S.H. Block is happy to review your case at no cost. Generally candidates for an Offer in Compromise are clients that cannot afford to pay in full or over time in reasonable increments. There is also a hardship factor that may play into acceptance into an OIC. You must be compliant to receive an OIC, this means all applicable tax years must be filed before IRS will negotiate.
How does the IRS know what I can afford to pay?
The IRS has what is called the allowable living expense. This is based on their terms and national average. What the IRS will allow as a living expense is recently been updated. So if you were turned down in the past things might be different now. There are special circumstances when an attorney can get an increase to certain living expenses. A skilled tax attorney can negotiate and fight for your rights. Our firm will look at your income and assets and make a true determination of what you can afford to pay. Hire an experienced tax attorney who is current on all the changes to tax law, as they are frequent and complex. You want an aggressive yet sensible attorney in your court when negotiating what you can afford to pay.
But I got turned down why apply again?
The Fresh Start Initiative has expanded its parameters when reviewing and accepting OIC’s. The new guidelines may now make you eligible for the updated program. Also using an attorney who knows the numbers the IRS looks at and how they work, makes all the difference in the world. You cannot just come up with a number you feel you can pay, it is a complicated calculation. If you applied in the past on your own and got turned down, don’t risk it alone again consult with an attorney.
The Bottom Line:
Even if you have been turned down in the past that does not mean you are ineligible for an Offer in Compromise. With an attorney led Offer in Compromise along with the new rules and expansions, now more than ever you have a great chance of acceptance into the Fresh Start Program. Don’t wait for the IRS to act on your behalf instead be proactive seek out representation from a qualified tax attorney.