Offer In Compromise/Installment Agreement

[Kurly]

Need some opinions. Do you think that an Offer In Compromise along with an Installment Agreement would possibly be accepted by the IRS? Client would like to offer $4200.00 against $9000.00 with $1000.00 submitted with OIC and the remainder on the IA. Question really is can both be submitted at the same time?

Kurly

[DaveO]

You can do a deferred payment plan under an OIC. The balance must be paid in 2 years. However acceptance of the offer is dependent on the numbers. Is he offering everything he has and all free cash flow for the next 60 months?

[erchess]

However

You can do a deferred payment plan under an OIC. The balance must be paid in 2 years. However acceptance of the offer is dependent on the numbers. Is he offering everything he has and all free cash flow for the next 60 months?

The payment in two years of an OIC is not accomplished by means of an Installment Agreement Form. It's part of the regular OIC paperwork.

[Kurly]

Oic

The IRS debt is for tax year 1997. Tax payer was 12 yrs old at the time. She is now married and going to college. The OIC should be made out in her name only and her assets and liabilities only. Is that correct. The problem was caused by her father selling her stock from her education plan in 1997 and not paying the tax when he filed her return. He turned all the IRS letters etc. over to the T/P 2 years ago. Nice Father HUH? He ignored all the IRS notices. The IRS caught up with her when she applied for education assistance through the college.

thanks for allowing me to ramble

Kurly

[erchess]

Ouch

IF indeed she has to pay the debt the OIC should be based only on her assets and income and not those of her parents (assuming she is not their dependent any more) nor of any spouse (if she happens to be married now.)

However, I would first like to ask the very knowledgeable people on this board whether the IRS can make her pay tax debt that her parents should have paid while she was a minor.

If she does have to pay it, I would think that she should consult an attorney (I think one specializing in Family Law) to see if she has a legal case against her parents to recover what she must pay. This of course only works if one or both is in a position to repay her.

[DaveO]

What a mess, I'm assuming that you have checked to see the tax is correct and that she is getting credit for the stock basis and all. $9000 seems a lot of captial gains tax. If the IRS is accessing tax based on an SFR you should file to flip that over and maybe request a CDP hearing.

But to answer your OIC question. (And yes Erchess, I know that the 2 year payout is part of the OIC form, thought I said that.) The IRS will consider the total household income in figuring what they will allow. While husband can't be obigated to pay wife's taxes they will consider his income in deciding what they will allow for household expenses. Show the combined income and expense of the household in Sections 5 and/or 6. You will need to attach a detailed spreadsheet splitting the income and household obligations between them. Split household expenses by income % unless there is a better method.

Only the wifes assets should appear in Sections 3 and 4 of the 433-A form since they can't obligate husband to sell his assets to pay her separate tax debt.

I've got one of these cases going right now except it's the husband with the tax problems. I told her she couldn't get married till we got the OIC approved but she jumped the gun on me.

I can redact taxpayer information and share the worksheet I prepared if you'd like. Just pm me and I'll send it to you.

[TaxBird]

The outstanding tax must be paid

but I'm sure you can at least get an abatement on the penalties if you explain the situation. I used to write nice well documented letters but find these days I can call the IRS and get things abated in a lot shorter time sometimes just by calling and talking to the IRS rep and faxing stuff while they stay on the line. When you call, they'll let you know if you need to send something in writing.

Not the way I like to roll, generally, but calling has been more efficient without exception. Otherwise, I tend to spend a ton of time on my lovely, well crafted also very effective abatement letters.

As to the original question of whether or not to submit the installment agreement with the OIC, I don't know that there's a rule but seems to me one doesn't want to show all one's cards at the outset. Send the OIC to get the ball rolling and then offer the IA if you need it.