Discussion:Offer & Compromise Question
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Discussion Forum Index --> Advanced Tax Questions --> Offer & Compromise Question
Discussion Forum Index --> Tax Questions --> Offer & Compromise Question
| 4 February 2009 | |
| Situation,
Client single until 2008 when she married. She had not filed past tax returns. Long story short IRS caught up with her, she used an agency to settle the deal for older returns(99-03) of about $5000. **She was single during this time period and owned her own business** Agent denied the $5000 offer and is looking at the combined income for 2008 of her and her spouse (remember she got married in 2008), but the offer is for prior year tax returns when she was single and based soley on her income. Agent wants new amount to be roughly $12,000. Client brought this in last night and has until 2/23 to decided. Question - Can someone point me in the direction of some case law on them looking at the comibined income of both husband and wife for the sins of the wife before they were married. (Also this is occuring in a community property state) Any guidance or suggestion on how you think the agent dreamed up the $12,000 based upon a net income from her of 23,000 for 2008 and 95,0000 in 2008 for him? Any help is appreciated | |
| 4 February 2009 | |
| I think it has to do more so with the ability to pay, rather than the past sins of a spouse. Her husband, while not responsible for her past tax debt, can assist her in paying the settlement. It all comes down to current household income. | |
| 4 February 2009 | |
| Why would the IRS look back to her old financial situation when she currently has the ability to pay? Would you accept a client's argument that since he didn't have money last year, he can't pay you for last year's bill? Especially in a community property state - half of his income is hers now. | |
| 4 February 2009 | |
| First of all, it is not possible to give you any clue about the adequacy of the Offer without a look at her 433-A or how the IRS Officer came up with $12,000 without mind reading abilities or a detailed analysis from the Officer. I do have mind reading abilities so I would need the name and location of the Officer within about 100 yards.
To the other question - the new spouse is not liable for the taxes but the marriage does reduce some allowable expenses due the client. The reduction of allowable household expenses alone due to the marriage could easily account for an additional $7,000 being added to the offer. When a client gets married during the offer process, they deserve to have the offer rejected out of stupidity. | |
| 4 February 2009 | |
| Add new meaning to the marriage vow, "for richer or for poorer." | |
| 4 February 2009 | |
| I really thought that IRSfixer would also lambast the OP for using the wrong term 'offer & compromise' instead of offer IN compromise | |
| 4 February 2009 | |
| It bugs me a little...okay more than a little...MUCH more than a little, that the original poster has chosen to do NO research whatsoever and start by posting here. A simple search of the IRS form 656 (use Google and put in IRS form 656) would have answered a majority of the questions. So, start there and do your own work....not to mention Kevin's post that if you don't know the freaking term you shouldn't be representing ANY clients. | |
| 4 February 2009 | |
| 'Nuther thought...if the couple lives in a community property state, part of the husband's income IS subject to seizure to pay wife's premarital debts unless they entered into, and filed, a prenuptual agreement. They didn't, of course...lawyers cost money, you know... | |
| 4 February 2009 | |
| The post says it IS in a community property state. All the more reason why the poster needs to do his/her own homework first. | |
| 4 February 2009 | |
| Kevin, I guess I have seen it misused so often I am just not sensitive to it anymore. I am more bothered by the "professionals" posting here who cannot spell, capitalize, etc., and who think that teenage text message shorthand is appropriate in a professional forum. There are others who cannot properly state a question to get a meaningful answer. Then, as Steve points out, there are those who use this forum as their only source of "research". Some of the questions are so basic that it makes me shiver at the thought of them preparing returns or advising anyone. | |
| 4 February 2009 | |
| ...you mean they won't be sharing their fee with all of us that post an actual response cause if they are, I'll post a full answer. | |
| 4 February 2009 | |
| New hubby married a tax lien. I have had a few cases like this and recommend putting the offer before the ceremony. | |
| 5 February 2009 | |
| Thank you for all that helped with relevant answers and comments. I apologize for any spelling or grammatical errors in my post. I really was not shopping for a quick answer to my problem. As I stated in my post I was looking for case law or a place to do my own research on the problem. It was not my decision to take on the case, but was given to me to work on. I do not decide which clients are accepted. I assume everyone here started with limited knowledge and worked through various scenarios, case law and tax code to develop their extensive knowledge base. For those of us who what to broaden and expand our knowledge base, I assumed this was the place to achieve that. I realize now after several irrelevant posts to the question that this is not that place. | |
| 5 February 2009 | |
| That's NOT what you said. This is not a case law question. It's a simple question that should be known by ANYONE doing rudimentary collection representation. As I correctly noted, the answer is right in the IRS Offer in Compromise instructions.
| |
| 5 February 2009 | |
| Steve, it is not Mm's fault that his/her boss didn't read the instructions to Form 656 and sent her here instead of doing his own homework. Imagine how stupid the boss will feel when he tells the client that he never read the instructions to the form!!! | |
Johnbroylescpa (talk|edits) said: | February 5, 2009 |
| Had similiar situation three years ago here in SC. Lady came in and hadn't filed for 3-4 years, had taken earlier distributions from her IRA accounts, and paid nothing in. Balance owed was around $40k. At time, she was dating and a live in girlfriend of a local dentist, had no job. Her only job was to work out at gym daily, and look pretty. So we did an OIC, claimed she had no job, no income, couldn't borrow from any family, friends, etc. and that the IRS should settle it. This was all of course before the requirements of sending in large fees and a portion of the tax owed. Thing goes round and round for over a year with IRS requesting revised schedules and additional information (waiting it out), and then girl decideds to get married to dentist. Then IRS refused to settle anything. Only way I know to do it is let the debts get old and cold, and file a chapter 13 or 7 bankruptcy. Not a good solution, but that is my experience for what its worth. | |
| 5 February 2009 | |
| I'm disappointed by the responses in this thread. This is a professional forum and I would suggest the more professional approach would have been to either ignore the question or instruct the original poster to research IRS Publication 656.
I understand the frustration that arises when it appears someone is asking us to do their work for them (especially someone who does not appear qualified to do the work in the first place), but if our goal is to dissuade this type of post we shouldn't be providing the answer they seek while criticizing the poster with the same breath or keystroke. It simply encourages these undesirable posts and creates a hostile environment. Sorry to get on my soapbox here. | |
| 5 February 2009 | |
| First of all the IRS will not consider an OIC until all prior returns have been filed. This may be why the agent turned down the offer. taxea | |
| 7 February 2009 | |
| OP states counter offer was 12k. On income of 95K, take it. | |
| 7 February 2009 | |
| There's a part of this discussion that catches my attention that has nothing to do with OICs. It is professionalism and credibility, both of which would be reinforced if every pro posting here would identify themselves with their real name, credentials and location. Some of the people who have contributed to this discussion do that. Why not everyone? -- Larry Hess, CPA | Albuquerque, NM | |
| 7 February 2009 | |
| Lhh:
Some of us like the privacy - since these responses are Googlable and some are risque. If you have ever been in a divorce deposition - you would not want to be questioned on all of these posts. | |
| 7 February 2009 | |
| There is NOTHING more unprofessional than representing a client without possessing the requisite skill set. Since their mommies or spouses are not going to tell them that - someone must. | |
| 7 February 2009 | |
| Question - Can someone point me in the direction of some case law on them looking at the comibined income of both husband and wife for the sins of the wife before they were married.
If you do not have a good tax research tool RIA / CCH, try legalbit. also good reading is the IRM [Part5.8] TexCPA 14:07, 7 February 2009 (CST)
good luck | |
| 7 February 2009 | |
| Tex, that's a great cite. Those of us who practice in community property states are affected by IRM 5.8.5.6.5 in particular: "Community property states. Follow community property laws in these states to determine what assets and income of the non-liable person are subject to the collection of tax. See IRM 25.18.1.1.2 Community Property Law." Larry Hess, CPA | Albuquerque, NM | |
| 8 February 2009 | |
| Larry, Pent Up is right and with client confidentiality at issue here, so is my ID. taxea | |
| 8 February 2009 | |
| I've yet to see any info. posted in TA that would disclose the identity of a client. What is the concern about tax pro anonymity? One pro who reads TA contacted me privately and that led to an engagement. -- Larry Hess, CPA | Albuquerque, NM | |
| 8 February 2009 | |
| Larry, I truly believe that some people don't want to be associated with their own lack of knowledge, for fear that their clients might find out that they are not the tax pros that they purport to be. The recent plethora of questions that could be answered by actually reading Pub 17 is a prime example of the lack of basic tax knowledge by professionals that must not have much experience with real families and individuals' tax issues. They might be great at multi-national transfer pricing or mergers and acquisitions, (maybe even cost-segregation) but their expertise doesn't extend to the 1040. | |
| February 8, 2009 | |
| And look at the recent (last two month?) thread about a 'model' home being sold by the developer and the tax treatment (1031 exchange question, if memory serves).
The professional posted the original question, then along comes the taxpayer doing his own research. He found this site, and recognized himself.....even tho no names were disclosed. THAT's scary to me and makes guarding my identity important. | |
| 8 February 2009 | |
| Belle, no one would confuse you with those of no basic tax knowledge. You are a true professional. | |
| February 8, 2009 | |
| THANK YOU, Kevin. Coming from you, that's high praise indeed! | |
| 8 February 2009 | |
| I get that, Kevin. Nevertheless, there are those who participate here who seem knowledgeable who don't identify themselves when they post and don't even provide last names, affiliations, etc. in their profiles. I follow 4 other listserves (2 require vetting before being allowed to join) where all contributors provide their name, professional credentials and city and state where they practice. None seems to have any problem with that nor discussing fact patterns of issues. -- Larry Hess, CPA | Albuquerque, NM | |
| 10 February 2009 | |
| So, Larry, why don't you "out" them...so the rest of us know who they are?????taxea | |
| 10 February 2009 | |
| TaxProExchange | |
Wkstaxprep (talk|edits) said: | 20 August 2009 |
| The offer in an OIC is supposed to be the amount a taxpayer can afford per month and then you would take that figure and multiply it by 48. So if taxpayer can afford $200/month then the offer should be $9,600 of which 20% you would need to submit with the offer, and it's non returnable whether the offer gets accepted or not. I'm actually taking on an OIC for on my own for the first time. The reason is because the taxpayer legitemately quaifies. He/She has over $100,000 in back taxes to the IRS, has minimal steady income,can afford maybe $100-$150 month, has $0 assets (no cash, no 401k, no car, rents an apt.) and the 10 year statute is getting closer and closer on a few of the back years. Wish me luck. | |
| 20 August 2009 | |
| WKS - you know it is almost malpractice to do an offer when the statute is close to running out, don't you? Be careful. | |
Wkstaxprep (talk|edits) said: | 20 August 2009 |
| Hey Kevin,
Thanks for the info. I didn't know that. I'm filing tax returns from 1999 through 2008, so i should have mentioned only a few years are reaching statute (unless statute would begin to apply only if the return was actually filed). | |
| 20 August 2009 | |
| we just had this discussion today - Riley2 answered, so you know it is correct | |
| 20 August 2009 | |
| well, I just looked and maybe it wasn't today. Or maybe it wasn't Riley.
Today was a blur, tomorrow was also. | |
| 20 August 2009 | |
| the discussion I wanted to reference was about the statute of limitations on assessment and the SOL for collections for an SFR | |
| 20 August 2009 | |
| WKS, are there SFR's out there? If not, going back that far is not necessary in most cases. If so, you only need to file the most recent unfiled returns for which there are no SFR's. I suggest you get someone to look over your shoulder on this case because you could easily make mistakes that could cost your client dearly. | |
Wkstaxprep (talk|edits) said: | 25 August 2009 |
| I know this is bad, but what does SFR stand for? | |
Wkstaxprep (talk|edits) said: | 25 August 2009 |
| Ok, i just learned what an SFR is, i do not believe there are any SFR's in this case | |
| 25 August 2009 | |
| you can request a transcript of account to determine for sure. | |
| 25 August 2009 | |
| The most returns that should be filed are the last six. Going back further will just be padding your fees. Why prepare returns the IRS is not asking for and which she can't pay anyway? | |
