OIC Conversation

[Snaggletooth]

...I'm sure all of you have these occasionally.

"Do you do Offers in Compromise"
"I've done them, but I have had poor experience. What is your situation?"
"Well, I owe them $15,000 and can't pay."
"You don't know what you are in for. It will be pay-as-you-go, and will be at least an estimated $400, with all the grief we have to go through."
"That much?"
"At least, by the time we write all the letters and gather all the documentation."
"Well I've already talked an IRS agent down to $2300."
"Sir, you need to just pay this. You've already done better than anyone else could do for you."
"But I don't have $2300."
"Sir, have you called J K Harris?"
"Yes, and they want $2500 up front."
"Does your wife work?"
"Yes, she's an RN."
"Sir, that means she probably is making at least $60K to $70K "
"I don't think she should have to pay my bill."
"Do you file a joint return with her?"
"Yes, but she doesn't think she has to pay."

I couldn't get off the telephone fast enough...This guy could have paid at the time he was working. I got the impression that I would never get any money out of him either.

In the rural South, small children were taught in school the story of the "Little Red Hen." Goes something like:
"Who will help me make this pie?- Little Red Hen
"Not I !!" says the cow. "Not I !!" says the turkey.
After the pie was baked,
"Who will help me EAT this pie? - Little Red Hen
"I WILL" says the cow! "I WILL" says the turkey!

There is a whole world full of cows and turkeys.

[erchess]

Observations

1. I lived in a suburb and went to an urban preschool and kindergarten in the mid 60s but I had the story of the little red hen at home and I was exposed to it in either preschool or kindergarten.

2. If the IRS was willing to let this guy reduce his payment by as much as he says then either the agent was incompetent (possible but unlikely) or the man told lies not realizing that before he was done he would have to prove any relevant facts not already known to the IRS or there really is a case to be made that he doesn't owe the underlying tax or at least not all of it. Given his wife's income I think we can discount the possibility that there is doubt about his ability to ever pay it. Snags you have more experience especially with the country people in your area than I do and you were on the call, which I wasn't, but I would have wondered about the possibility of doubt about what he owed. I would also have mentioned the possibility of an installment agreement.

3. I get asked if I can do the pennies on the dollar deals such as get advertised but I have never met a client who knew the terms "Offer in Compromise" or "Installment Agreement" before they talked to a professional about their situation. Naturally I am not always the first professional someone has talked to.

[Possi]

I tell my clients...

... to pay the liability as soon as possible. I say, "The IRS is the worst lending institution in America!"

I'm not much help to them if they earned money and didn't pay their taxes. I'm aggressive in preparing taxes, not illegal, but aggressive, and I pay a lot of taxes on my income. I have little patience with those who want something for nothing.

arggggg

[Earl]

Oic

Taxpayer owes back taxes but spouse has never filed joint return with taxpayer. Spouse owns land and home in her own name only - taxpayer is not listed anywhere on deeds.

If taxpayer files OIC is the spouse's income and assets considered by IRS when determining whether to approve OIC? Does taxpayer have to list spouse's assets on OIC form when completing?

In other words if the tax debt is taxpayer's only does only his income and assets get considered or since he is married does all marital income and assets get entered on form.

[Black Bart]

I

;

...
"Does your wife work?"
"Yes, she's an RN."
"Sir, that means she probably is making at least $60K to $70K "
"I don't think she should have to pay my bill."
"Do you file a joint return with her?"
"Yes, but she doesn't think she has to pay."

have a similar one right now, but with a slightly different twist.

Hubby owes $4K back child support arising from ex-girlfriend's paternity suit. He and current wife usually file together; no kids, no credits, but his big business loss would allow her normally refunded W-2 withholdings to wipe out the debt entirely.

Will she do it? Will they emerge from this fiscal undertow? Who knows? It's up in the air 'cause she's thinkin' it over and givin' deep thought to this incredibly difficult decison.

I mean, after all; going MFS (or injured spouse) without his loss she gets a (gosh!) full $200 refund all to herself. And while agreeing that family financial stability is important and, yes, she did love the guy enough to marry him, still, "I'm ticked off about the whole thing 'cause he always gets off the hook...I get shafted...blah, blah, blah."

[taxea]

Wow...that's cheap...will you do my clients OIC's. I will pay your fee and bill them mine.

$3000. retainer, any left will be refunded...covers all contact with IRS/State, prep of necessary returns, prep of OIC docs...and if that exceeds the $3000. they will be billed the additional fee. taxea

[erchess]

Not sure

[In other words if the tax debt is taxpayer's only does only his income and assets get considered or since he is married does all marital income and assets get entered on form.[/QUOTE]

It may depend upon what state you're in. If you are in a community property state you I think generally have to list half of your spouse's income as yours and half of your income or loss as theirs. That is just how I was told years ago when I was first entering this business that things work for MFS returns in community property states other than Louisiana where legal matters are often different than in any other state. How property would be handled would also likely vary from one community property state to another. On the other hand, in a non community property state I don't believe that your Spouses' income or assets your spouse owns separately from you are available to satisfy your tax debt for a year in which you did not file a joint return with your spouse.