new OIC rules

[jainen]

How 'bout them new OIC rules? Starting today (7/16) you have to pay 20% at the time you submit the offer, and they get to keep it even if they turn you down! Most successful offers tap assets that the IRS could not otherwise reach--in other words, you borrow from your family. Now you have to beg for that money without even the promise that it will solve your problem.

If you are proposing periodic payments, you must begin the payment schedule with the offer and continue it while the IRS isthinking about it. If you were already on a payment schedule, plan on paying double for the next two years!

[Black Bart]

But...but...but...,

my OIC-eligible clients don't have 20%. In fact, most of 'em don't have 20 cents; or even my fee, which has to be extracted in payments too.

Hmm...is it just me or is Everson going for the throat everywhere along the line? This seems to be, as a Valley girl would say, way harsh.

No question but what this'll weed out the wingin'-it types. Gosh, what a smashing offer! A 20% non-refundable down payment and the opportunity to make payments for months while IRS decides at their usual glacial speed against (probably) the t/p for lack of cause (usually t/p is filing it 'cause they don't have any money).

[Unregistered]

Jainen, where can I get info on the new procedures?

IRS.gov? do you have some independent reviews that I could read? I have 2-3 potential OIC's per year and would like to stay abreast of the new rules.

thanks in advance!

JoshInNC

[Bird Legs]

Josh in NC

You might find something on the NATP, or other professional organizations website,
re. the new OIC rules.

[jimmcg]

irs.gov has more than you would ever want to read on the new OIC proceedures. Just type in offors in compromise.

[jainen]

extra for them

>>my OIC-eligible clients don't have 20%<<

If they don't have 20% of the offer, how are they going to pay 100%, BB? If they can't even make the first payment, how are they going to make all the rest? Taxes are the least of worries for a client who has no assets and little income.

From the IRS point of view, why should they accept an offer for anything less than they can get by just taking it? They expect you to beg, borrow, or steal a little bit extra for them.

[Black Bart]

Don't be so picky.

I don't actually have any OIC clients. The best mine can do is installment payments because there's no way on earth they can raise enough to pay off 1/2 or whatever.

I've only had one guy ask me about OICs and that's the one that I told about a while back who went to J. K. Harris and paid them $1,500 to get out of $10K. It didn't work -- they just took the dough and made no efforts except to file the request, so he had to pay off the whole thing. They managed to stall it for a couple of years, but penalties and interest more than offset that. I ran into him a while back -- he'd complained (through me) to them and to Better Business Bureau, so Harris finally sent back $1,200 to him. We were both surprised that they refunded anything to him. He paid IRS in full -- had a $50K per year job and I had advised him to forget it -- no chance with that kind of income -- but he insisted on going to Harris to try and beat it anyway.

[jainen]

come to me

>> no chance with that kind of income <<

He should have come to me. For $1500, I would have GUARANTEED him at least a 10% reduction in his $10,000 liability.

[DaveO]

The changes were made to offset some of the tax cuts. The IRS is somehow under the notion this will increase collections. For all intent and purpose the OIC program is dead. Other than going abroad and selling a kidney OIC clients have no way to raise the money other than family or friends. For most it's better to file a 433a and b if needed and just wait out the collection statute.

[Unregistered]

this is a crazy scenrio

I had a client with whom I have been working for about 18 months to get current on several prior year 1120S's and 1040's, along with failure to pay 940 and 941 balances. Client called today and said that IRS agent came to her office and told her if we will file the returns she will dismiss the entire case. She had client complete 433 a and b (without consulting me, of course) and took them back to her office. I called the rep today and she said, "I've already closed the Corp, as the taxpayer indicated the returns will be negative anyway. Just send us the returns with negative net income and file the 1040's." She then went on to tell me that the trust fund recovery penalties won't be pursued (in excess of $150,000) and she'll leave them alone once she gets the returns.

Am I losing my touch or does something smell fishy here? I've never seen the service roll over on a trust fund penalty that's only a couple years old. Is there something I should be on the lookout for? Should I get in writing from the agent before submitting the returns that there will be no future issues with these years? Just sounds too good to be true.

JoshInNC

[Bird Legs]

Trust Fund Penalty

Did the IRS representative stop at a local bar and have a few drinks before all this
took place?

[jimmcg]

It doesn't mean a thing unless it is in writting!

[DaveO]

Gosh JoshInNC

That's about the wildest IRS story I've heard, assuming your not just pulling our legs for some fun. Did the IRS agent breathe some wacky fumes at your clinets business?

I do agree that until it's in writing it's no good. I have some friends that owned a business and got behind on their payroll taxes. They were not and are not my clients. Anyway they worked out an installment agreement with an IRS agent. That agent was transfered to another district. The replacement agent came in and said "Too bad, I'm not honoring that agreement" and locked their doors.

If it works out I'd frame that penalty abatement letter.

[Unregistered]

I'm going to be submitting the delinquent returns

then we'll see what happens.

I'll keep everyone posted!