Get A Tax Lawyers Help When Making An Offer In Compromise To The IRS

The offer in compromise process is can be a lengthy and complex undertaking. As such taxpayers should retain the services of an experienced IRS tax attorney when deciding on how much to offer the IRS. A tax attorney will have an understanding of the realistic requirements for acceptance of the offer by the Internal Revenue Service. The IRS will begin assessing the acceptable amount by getting the value of the taxpayer's assets. Next the IRS will make an estimate on the taxpayer's ability to make payments on the amount left over after the sale of assets. By reviewing the taxpayers financial records the IRS determines the amount amount they feel the taxpayer can pay in installments and combines that number with the value of the taxpayer's assets at a quick sale. This amount will become the minimum amount the IRS will accept to settle the tax debt for a successful Offer In Compromise.

There are a few exceptions for offer in compromise amounts including:

extreme hardship that may make it unlikely the taxpayer will be able to pay the amount

The Taxpayer's Attorney is able to prove the taxpayer does not actually owe the taxes

If the above special cases do not apply than the IRS assesses the following guidelines:

The IRS will try to determine a realistic collection potential from the taxpayer. Obviously if an individual owes $600,000 from a failed business attempt and now only make $30,000 they will not have a realistic chance of paying the amount owed. Rather than get nothing the IRS will adjust the amount to the maximum they feel the taxpayer will be able to pay. This is not done for the taxpayer's benefit but to ensure the IRS gets some money towards the tax debt.

The two factors the IRS will use to figure out what a reasonable collection potential is are:

The Value of the taxpayer's assets

The Taxpayer's potential future income

Total Value of The Taxpayer's Assets

The first thing the IRS will do is value the taxpayer's assets. They will determine the estimates value of anything not exempt from seizure and sale by the IRS. A federal tax lien on any asset owned by the taxpayer will not prevent the IRS from seizing and selling the property. In addition the IRS chooses a quick sale liquidation method to collect on and equity in the taxpayer's property.

Taxpayer's Future Income Potential

In a less straight forward method, the IRS will attempt to determine the reasonable amount they can collect from a taxpayer's future income potential. In many cases troubled taxpayers may have had problems that affect their ability to make money at their chosen career. A example of this is if an individual has been injured in a serious auto accident and can no longer physically do the work they have built a career around and as a consequence make much less than previously and become unable to pay the tax debt from before the incident. The determination of a taxpayers ability to make future income is where is it important to have an excellent tax lawyer to help represent the taxpayer.

The IRS will try to determine the income the taxpayer will have available to make payments to the IRS, this amount should be taken from future monthly income estimates with monthly living expenses subtracted. Many times the IRS will multiply your disposable monthly income by 48 or 60 months to arrive on a amount of future income potential.

Determining the Taxpayer's Reasonable Collection Potential

After the above amounts have been determined the IRS will total the Realized value of the taxpayers assets added to the taxpayer's future income potential. The amount is called the Reasonable Collection Potential and this is also the minimum amount the IRS will accept from a taxpayer for an Offer In Compromise.

About the Author

As a dedicated IRS Tax Lawyer Mary has been helping clients get tax debt relief by negotiating currently non-collectible status, offers in compromise, installment agreements, innocent spouse cases, audits, removing levies, releasing liens, and negotiating penalty abatement. Mary's career as a IRS tax attorney began in 1993 after graduating from Stetson University College of Law. She graduated

Author (getmejustice). Submitted on Wed, 3 Aug 2011 Time: 7:07 PM

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