IRS Offer In Compromise, IRS, tax resolution

Easier IRS Offer In Compromise Program Help

Although the IRS offer in compromise program has been around for decades, it has not functioned as it was originally designed. The original design was to resolve delinquent income tax debts by providing taxpayers with a way to make a reasonable offer to the federal government in the form of the IRS. The goal was that such an offer would be beneficial for both taxpayers and the federal government. However, the high bar of financial regulations that began with the program and ultimately prevented it from working. Today, however, it is easier for a taxpayer with the help of a tax resolution specialist to get an IRS offer in compromise than ever before.

IRS Offer In Compromise Program

In theory, the IRS offer in compromise program is supposed to enable the government to collect what it can from the taxpayer while relieving the taxpayer of an income tax burden they simply cannot pay. In practice, the IRS offer in compromise program had become a closed door slammed in the face of countless taxpayers. Although the Tax Resolution Institute successfully negotiated hundreds of IRS offers in compromise for past clients, even more clients we had to turn away from this program because of the stringent requirements.

In the past year, however, the IRS has lowered the bar for the IRS offer in compromise program. Are you ready to take advantage of this tax resolution opportunity?

 IRS Offer In Compromise Collection Potential

In the beginning, the minimum offer the IRS would accept was the sum of the net realizable equity of the taxpayer’s assets and the taxpayer’s reasonable collection potential, known as monthly disposable income (MDI). The starting point for determining MDI was the excess of the taxpayer’s monthly income over expenses.  In the case on an individual taxpayer, the expenses were not the taxpayer’s actual expenses, but allowable expenses determined by applying collection financial standards. The difference between the two was then multiplied by 60. The product was reasonable collection potential of an IRS offer in compromise.

Collection financial standards consist of national standards for food, clothing, and other items; national standards for out-of-pocket health care items; local standards for housing and utilities; and local standards for transportation (comprised of public transportation costs, vehicle ownership costs, and vehicle operating costs).

Lowering The IRS Offer In Compromise Program Bar

The big change came when the IRS lowered the bar for offers in compromise.  In 2015, MDI is the excess of the taxpayer’s monthly income over allowable expenses, multiplied by 12 in the case of an offer payable within five months, or multiplied by 24 in the case of an offer payable in six to 24 months. The IRS no longer entertains offers payable in more than 24 months. At the same time, an IRS offer in compromise can now be much less than it was before.

The new offer in compromise regime is much more realistic, and consistent with the aims of the program. The IRS offer in compromise program changes are of an indefinite duration. Still, it is best to take advantage of such changes today as opposed to tomorrow. Given the fact that IRS tax debts compound interest on a daily basis, every day you wait your tax debt is growing, as is the size of any potential offer. If you want help with the IRS Offer in Compromise program, please contact the Tax Resolution Institute by calling (818) 704-1443 today to access reliable tax resolution services.