Offer in Comp

[Bjorn]

How long do you need to wait to file another offer in comp when the first one is denied?

Financially the taxpayer has only gotten worse since the first rejection.

The main issue is he ones 1/7 of his mother's house and I think the IRS would love to put mom in the street.

any thoughts??

[jainen]

That's nonsense

>>the IRS would love to put mom in the street<<

That's nonsense. She is not the target, except that your client is hiding behind his mom's apron.

You need to draw up some realistic goals for this collection matter. If he truly has no assets then it might be best to just ride out the statute of limitations (which are extended two years every time he files OIC). There is a lien on the house, of course, but they aren't going to foreclose. For one thing, it's only a 1/7 interest and the law prohibits them from seizing assets when the cost of sale would exceed the value. Anyway, the public relations aspect of that setup is too scary even for the IRS.

On the other hand, if there is sufficient equity in the total property you can probably pull enough out of it through a refinance. That's exactly the kind of offer the IRS wants--money they can not otherwise reach through normal collection actions.

[jainen]

going to prison

>>Financially the taxpayer has only gotten worse since the first rejection<<

By this do you mean that he held something back? OIC is intended to be a matter of total net worth--everything you have now plus everything you expect to get in the next few years.

There are no rules about when to resubmit an offer, but if the first one was not made in good faith then the IRS is going to be skeptical about a repeat unless some particular event has materially changed the picture. I mean something big like the death of a key partner, bankruptcy, a major disaster, or going to prison.

[TaxBird]

RE: &quot;Ride out statute of limitations&quot;

Jainen wrote:
"If he truly has no assets then it might be best to just ride out the statute of limitations (which are extended two years every time he files OIC)."

Jainen: Just to clarify...does this mean that if nothing is seized within the statutory period (because there was nothing to seize) then the obligation goes away?

The reason I'm curious...I have a client who has a crusty old civil penalty sitting out there on his credit report (more than 10 years old).

Years ago he was found to be the responsible officer on an outstanding corporate payroll obligation even though by the time the payroll obligation was due, responsibility(?) for payment of the tax had passed to a bankruptcy trustee ('responsible' by virtue of the fact that the trustee and not the officer had control of the corporate funds that included $$ to pay the PR obligation). In the end, he (client/officer) was found to be the responsible party even though he had a signed letter from the BR Trustee promising that all o/s payroll tax obligations would be paid. (All this before my time, btw).

Nothing was ever seized and the statute has passed but I can't get it off the credit report. Or rather, I can't get it to 'stay' off the credit report. (It goes away, then comes back).

Do you know, will that judgement hang out there in perpetuity or is there a way (outside of paying the judgement) to get that gone for good?

I'm interested in your (and other's) thoughts on this.

[jainen]

you call it a &quot;judgement&quot;

Since you call it a "judgement" I assume every excuse has already been exhausted. At one time he might have had a chance for OIC based on doubt as to liability. Unfortunately, after you lose in court there is no longer any doubt--legally, he owes the money.

Therefore the credit report is historically accurate. You can ask the reporting agency how to interpret it. I believe judgements normally are dropped from the credit report 10 years after the date of judgement, which is of course much later than the date of the original debt.

.

[TaxBird]

Right - the judgement stands and there's no way to get that reversed. I guess I knew the answer to that one but was looking for some reason to say 'it's no longer an obligation because it was never pursued'. (I always hold out hope).

And yes, it's *supposed* to be dropped after 10 years but from what I can gather, dropping is discretionary by reportinng agency. I have been successful at getting it permanently off two of the three big credit reports but the third (either Equifax or Experian) keeps re-inserting it. It comes off for a time then it gets re-added. Then I have to call them, and then they take it off again. I forget now the reason they told me for this.

In any case, thank you Jainen.