OIC help

[Catherine]

I have a client who came for advice on a sizable outstanding tax liability, and after discussion and analysis he's a good candidate for an offer in compromise.

He's someone who actually would _like_ to pay it all -- just can't manage it. A payment plan would require about $1,000/month more than he has cash flow to support (after current taxes and court-required alimony, child support, and child medical payments, and absolute bare-bones living expenses for him). Another case of lawyers make out like bandits, and a guy trying to do the right thing goes slowly under. Sigh.

But I haven't touched one of these since before they messed with the rules a couple of years back. Any advice for someone whose knowledge is both outdated and rusty? I offered to send him to a local colleague who specializes in OIC's and told him how long it had been since I'd done one -- but he wants me.

Thanks,

Catherine

[Edward]

I haven't had an OIC, but just recently I downloaded Form 656 from IRS WEBSITE. I believe it has all the data to get

you going.

[Catherine]

I haven't had an OIC, but just recently I downloaded Form 656 from IRS WEBSITE. I believe it has all the data to get

you going.

ATX has the form as well; I was hoping for advice on presentation rather than documentation.

But thanks.

Catherine

[TAXBILLY]

IRS pages re OIC:

http://search.irs.gov/web/query.html?col=a...r+in+compromise

taxbilly

[jainen]

>>hoping for advice on presentation rather than documentation<<

Those two words are pretty much the same thing, in my opinion. By all means, write up a nice story about how he's struggling to pay his baby's hospital bill. Then go back and make sure you can prove every single dollar and date you tried to avoid. Don't just say he's in a tough spot now. The IRS wants to know about the next five years and if you are clever you might sneak in some favorable history.

Anyway, you can't determine whether he's a good candidate, and this is another of my opinions, until you have a complete financial statement in the exit tray of your copier.

[Catherine]

>>hoping for advice on presentation rather than documentation<<

Those two words are pretty much the same thing, in my opinion. By all means, write up a nice story about how he's struggling to pay his baby's hospital bill. Then go back and make sure you can prove every single dollar and date you tried to avoid. Don't just say he's in a tough spot now. The IRS wants to know about the next five years and if you are clever you might sneak in some favorable history.

Anyway, you can't determine whether he's a good candidate, and this is another of my opinions, until you have a complete financial statement in the exit tray of your copier.

I was able to determine that this is an avenue worth pursuing. As opposed to "just" trying for a payment plan -- which is what I've done for everyone else who has come wanting an OIC the last however many years.

So I've sent him off to dig up financial data. From what he _tells_ me, he assets are nothing but a 7-year-old car with many, many miles on it, and his clothes and watch. Ex-wife has everything else; no investments, retirement plan, cash-value life insurance. Alimony & child support set by court based on _former_ earnings, now cut by 25% in this economy but at least he still has a job.

Thanks for the info; I'll see (once I have the financial data) if he can get something from employer about documenting cut in pay.

[Catherine]

IRS pages re OIC:

http://search.irs.gov/web/query.html?col=a...r+in+compromise

taxbilly

Thanks, taxbilly. Clicked on the link and just about every single entry was highlighted in my browser's "you've been here" color!

[Edward]

For Catherine: In reference to my earlier post: When you go to the IRS website and download Form 656 (which is a

44 page booklet (& not just the form itself) you'll note that they show steps 1 thru 8 with detailed instructions. I'd think

this would be the better place to start.

[Jack from Ohio]

Get a big retainer up front!! Lots of work ahead of you! Stats show that approx 1 out of 7 OICs are approved.

[jainen]

>>From what he _tells_ me, he assets are nothing but a 7-year-old car <<

It may be so, but I'd still like to see the actual financial statement. If true, he has no way to make a lump-sum offer so the best he can do is set up a payment plan anyway. Can you identify any reason why the IRS would want to compromise a bill they can just as easily and quickly collect through a common wage levy?

Generally to be "a good candidate for an offer in compromise" one must have something to offer. The key to a successful OIC is to find money that the IRS can't otherwise touch , so the offer exceeds what they can collect in the normal way. For example, the ex-wife might agree to participate to clear a tax lien against marital property she controls. or to avoid a wage levy that would cause her source of support payments to lose his job.