OIC

[ILLMAS]

TP owes 13K, he has has a business but is not on the payroll because he is just able to cover the operating expenses, he has a rental property (worth $250K) that is paid off and has another on a short salen (worth 150K). Also, TP had an installment agreement back in 2008, but stopped making payments after the 1st one. From your experience, will the IRS accept an OIC for this TP?

[Jack from Ohio]

He will have a better chance if he takes the money to get an OIC and buys lottery tickets.

[Lynn EA USTCP in Louisiana]

Not a chance. His net worth (assets less liabilities) FAR exceeds the amount due to the IRS. He should take out an equity loan against his real estate and pay it off.

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

[jainen]

>>will the IRS accept an OIC for this TP?<<

Frankly I'd be surprised if the IRS even let the short sale go through.

[ILLMAS]

>>will the IRS accept an OIC for this TP?<<

Frankly I'd be surprised if the IRS even let the short sale go through.

agree 100%, I notified TP about this and for him to consult with his agent.

[jainen]

>>will the IRS accept an OIC for this TP? <<

While he may not be a good candidate for an Offer in Compromise, he DOES seem to be a good client for a collections engagement. He has to deal with the tax lien somehow in order to sell the house, and he apparently has sufficient assets to get straight (and pay your fee!).

We all get clients who greedily read the stories (ads, not news) about settling for pennies on the dollar. In reality, the IRS is far more practical. For a small amount like $13K, the disadvantages of an OIC are probably not worth it.