Offer in Compromise

[mesha]

I'm preparing an OIC for a client. His only asset is a 401(k) Profit Sharing Plan. Can or will the IRS seize thses funds? The Plan would cover his past due taxes, but open a whole new world of hurts!

[joanmcq]

Do the 433. If assets & income are more than the taxes due, the offer won't fly. The IRS can levy the 401(k), and penalties won't apply at least. but the distribution would be taxable. Can you qualify for an installment plan?

[DaveO]

Can the taxpayer make withdrawals from the plan?

If he can't touch the money the IRS can't either. I had one of these a few years back. The TP was willing to give up the plan but the employer said he couldn't touch the money until he retired. We sent the IRS a letter from the plan administrator stating that and the asset was off the table.

[mesha]

Do the 433. If assets & income are more than the taxes due, the offer won't fly. The IRS can levy the 401(k), and penalties won't apply at least. but the distribution would be taxable. Can you qualify for an installment plan?

Income is burdened with past due bills, collections and child care judgments. He just has no cash flow.

[mesha]

[QUOTE=mesha;61656]Income is burdened with past due bills, collections and child care judgments. He just has no cash flow.
Thanks for reply.

[mesha]

If he can't touch the money the IRS can't either. I had one of these a few years back. The TP was willing to give up the plan but the employer said he couldn't touch the money until he retired. We sent the IRS a letter from the plan administrator stating that and the asset was off the table.

No, he has told me he can't touch it!

[JoshinNC]

Then how is he paying you??????????????

[QUOTE=mesha;61656]Income is burdened with past due bills, collections and child care judgments. He just has no cash flow.[/QUO

Just wondering?

[DaveO]

The IRS won't care about his bills

However the child support and judgements perfected ahead of the IRS will be allowed. He will have to default on non-secured debt such as credit cards. Has he looked at bankruptcy yet?

[mesha]

[QUOTE=JoshinNC;61675]

Income is burdened with past due bills, collections and child care judgments. He just has no cash flow.[/QUO

Just wondering?

Your question does not shed any light on the problem, however I will not be paid! But once in a while it is nice to help someone who needs help! It helps them and it makes me feel better that I was able to help someone!
Try it!!

[JoshinNC]

Why so touchy?

[QUOTE=mesha;62154]

Your question does not shed any light on the problem, however I will not be paid! But once in a while it is nice to help someone who needs help! It helps them and it makes me feel better that I was able to help someone!
Try it!!

I don't run a charity, I run a business. I do favors for folks who fall on hard times, but working an OIC for free is waaaaayyyyyy more than a favor.

Go hug a tree or something, I'm going to take my boat out this afternoon (cause I make the money for pay for it and the gas it guzzles).