IRS offer-in-compromises

Also, an offer-in-compromise tolls the 10-year statute of limitations on collectibility. If you have an OIC pending for 18 months and your offer is rejected by the IRS, you still have to add that 18 months to the ten years. Additionally, if you file bankruptcy, taxes that were due more than three years prior to filing are discharged through a Chapter 7. If an OIC was pending at any time during that 3 years, you have to add the period of time the OIC was pending to the 3 years. It can come as quite a shock to find that the the taxes were not discharged.

My opinion is. that through the OIC process, the IRS has found a great way to legally extend the time they have to collect back taxes while at the same time getting taxpayer's to voluntarily share all their financial info. In order for an OIC to be "considered" you must provide detailed financial information re: your assets, liabilities, complete information, even down to providing phone numbers of "friend/relative not living with you." Then, if your offer is rejected, they have all the info they need to attach/levy bank accounts, assets, etc.

You can probably tell that my experience with the OIC process was less than pleasant.

I would be interested in knowing if anyone here actually has an accepted OIC?

 

Basically it works like this: You pay a lawyer between $1500 and $5000 to setup an OIC. Most want 10% of total savings.

Will they save you money? Sure if you are broke living on poor means, and have no equity.

If you own any property, you're screwed, you're gonna have to cought up the assett value.

However. Keep in mind you can arrange a payment plan with an attorney as well with stopping the interest/penalties.

Roughly it works like this:
1. Payment plan (with or without OIC).
2. Pay within 90 days of OIC acceptance equal to whatever the IRS deems are your acceptable expenses (lawyer again fights this) * 48 months (or the lesser of your SOL based on date of filing)
3. Pay withing 12 months of your (money-expenses) * 60 months (or the lessor of your filing).

If you make $60K year, own a car, own a car, your best bet is to work out a payment plan you can live with or get a phatty credit limit and pay it off in the simple 48month OIC payment.

Say The lawyers and IRS agree you have 400/month of dispensible (non-needed) dollars.

No matter what you owe they'll take 400 * 48 , cash, right now to settle within 90 days. $19200

Or if you elect the one year to pay it back, it then becomes $24000 due in 12 months, regardless of amount due.

If you decide to do payments, they will take the amount of cash you have over bare necessities, and make you pay it in payments up to 10 years. With or without tax penalties. With or without liens being reported to CRA.

This is why you're paying a lawyer, big money.

If you don't own squat, you make $18K year, have a kid, dont have a single penny , live in the slums, and owe a $10K in back taxes, then yes, this is where "pennies on the dollar" are true.



If you know you owe alot of back taxes, its best to begin moving your assetts out of your name a long time in advance. Find a crappy job and live like a miser, then you can do the pennies on the dollar, resume life, etc.

If you can't afford a good lawyer, you might as well cough up all the $$$ owed.

You wouldn't take a "Legal consultant (ie not a lawyer)" to defend you against a civil/felony suit now would you?

 

clc -
can you contact me? my email is on.

 

Don't forget that as surely as there is an extension of time to file, there is also an extension of time to PAY tax that may be helpfull too.

The IRS doesn't want you to know this.

B.

 

payment plans to IRS

I used an enrolled Agent that was part of a 14 member firm. He worked for firm that assisted non-filers, and late filers, and some clients that were being audited.

His firm was entirely composed of former IRS employees who used to either be in Auditing or Collections in the IRS. The name of the Dallas Co. that was absolutely great is the Schlichting Group.They charged $250 flat fee to prepare each year's past due return and negotiate a plan with the IRS as needed.

Talk about knowing the in's an out's ! These guys knew how to work out the deal with the rep's in IRS collections.

At that time I had not filed taxes for three years, and owed 8K in interest and penalties. <<< long story, sold some stock options, lost paperwork, etc. but the lesson is : Never, Ever Again !!!!>>>>

By time all was said and done, the Enrolled Agent had worked out a payment plan at $200 per month. In order to qualify, you had to have all your returns filed. And of course, the IRS charged interest all the while. But I got them paid off, sometimes more than the $200 per month. But at least it was a manageable amount for me at the time.

I think you can do a search for IRS enrolled agents by State, and there are a multitude of links. I personally don't think you need a tax attorney unless you are talking other than average returns.