Discussion:Offer In Compromise - Recently Married Taxpayer
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Discussion Forum Index --> Tax Questions --> Offer In Compromise - Recently Married Taxpayer
27 December 2007 | |
| Hello all. I have a question regarding an OIC: I have a new client who has tax debts (mostly ss/med due to sole prop) back to 1998 totaling $85k plus. I have prepared a handful of OIC's, but this situation is different in that he just married in 2007. I am looking for insight as to how this recent marriage will affect the tax debts, OIC process, likelihood for acceptance, and compromise amount. His spouse has W2 income of close to 90k/year. She owns a home, but they are also leasing a home out of state where he does business on a regular basis. Just a little unsure here as to what the IRS view is going to be on the household income/deductions side of things. Has anyone dealt with this situation? Anything quirks due to the multiple home situation, and the fact that she make decent money, but the debt is his and he only clears 20k per year after expenses.
Thanks in advance. | |
| 27 December 2007 | |
| If they live in a community property state, then you should use half of household income. If not, then only his income would be counted but he would not get the benefit of her separate expenses or half of the household expenses. You can use all the income and all the expenses. I generally do the calculation both ways to see which works out best. Her assets can be omitted from the 433-A.
If he has taxes that may start expiring next year, I would factor that into any decision to do an Offer. Unless his income is very small, I doubt they qualify. It is not possible to speculate on the Offer amount without an analysis of the 433-A and B, if applicable. | |
| 27 December 2007 | |
| - Thanks for the post. He spends most of his time in TX (a community property state), where they rent a home. She lives here in MN (not a community property state). I'd prefer to use his income and expenses only, as he really makes very little after business deductions - I am wondering if this is an option.
- Can you expand on your comment about the expiration of the tax debt, as that crossed my mind as well. I have not encountered debt this old in an offer situation. How does that factor into the process? | |
| 27 December 2007 | |
| Yes, you can use just his income and expenses but he will only get half of the national standard for food, etc. as well as housing expenses.
The SOL plays two roles. First, it goes into the decision as to actually file the offer or the timing of the offer. Second, when you do the offer calculation, you do not need to go beyond the last statute expiration date in lieu of 48 or 60 months. | |
| 27 December 2007 | |
| It sounds like the liability in question is nearing the end of the line unless the client was in a Chapter 13 that defaulted after several years. When does the statute of limitations for collection expire? Do you really want to extend it by the amount of time the offer is under consideration? Does an offer make sense under the circumstances? | |
| 27 December 2007 | |
| I believe the offer makes sense, because the majority of the $85k plus that is due stems from the more recent years (2001, 2002 and 2003) - I should have made that clear. | |
| 27 December 2007 | |
| Don't make a move without calling Roni Lyn Deutch. When it comes to OIC's, she's The Man. | |
Donniecastleman (talk|edits) said: | 27 December 2007 |
| Most commonly used phrase at the last tax scam seminar:
"Hey Roni, you left the toilet seat up!" hahahahahahahahahahahahaha ok it wasn't that funny. | |
| 27 December 2007 | |
| Yep, I's joking. Poor old Roni. She doesn't fare too well in the posts on ripoffreport.com. Each of those stories starts the same, ends the same, and none has a happy ending. Everybody is just out to get her, bless her heart. | |
| 28 December 2007 | |
| I'm on board with Irsfixer, but I'd like to add that a property settlement agreement between the two lovebirds may also be something to consider.
MCASH - the SOL is generally 10 years, but it can be tolled for many reasons. Also, the IRS can always seek a judgment against the taxpayer in Federal District Court which would increase their ability/timeline to collect. | |
| 29 December 2007 | |
| The 10 year statute of limitations CAN be extended but except for bankruptcies and earlier offers in compromise, it rarely is. IRS has also had a lousy record in refiling tax liens on extended statutes, a situation which can create a huge mess.
With OICs, if I wear a dress and have an animated me prance about on my website and triple my fees, can I be the man? | |
16 August 2011 | |
| I have a client in CA, a community property state, who is now married but has a liability from before his marriage. His wife owns a home, in her name only, which they live in which she purchased from her separate funds (cashed out her 401(k) early.
From the above discussion, it looks like I am to include both incomes and expenses on the 433-A (because of community property state), but I can exclude her home from the assets. 1) Is the 656 prepared in his name only, and signed by him only? 2) After using both incomes and expenses on the "monthly household income and expense information worksheet" (433-A) do I then only use 50% of the "remaining monthly income" (his share) in the calculation of the minimum offer amount? 3) Does she also sign the 433-A? | |
| 16 August 2011 | |
| Brief note. New form is 433-A (OIC). 656 has changed too. Both have a revision date of 3/2011. Much improved process. | |
| 17 August 2011 | |
| The basic question the Form 433-A is designed to answer is "What is the reasonable collection potential of this account?" In a community property state the post marriage assets of either spouse--this includes wages--are subject to the pre-marriage debts of the other so the new wife's income must be included. The Form 656 and 433-A (OIC) is signed only by the taxpayer/husband.
I have had a couple of cases where the dearly beloved wanted their lover but not the lover's tax lien and had enough resources to fund an offer before the ceremony. This works out much better if you have the opportunity to do it. | |
| 17 August 2011 | |
| The discussion above seems to indicate that her "assets" are not included on the 433-A(OIC). With respect to his share of her community property income I can understand including 50% of her income and expenses, that was why I asked above.....2) After using both incomes and expenses on the "monthly household income and expense information worksheet" (433-A (OIC)) do I then only use 50% of the "remaining monthly income" (his share) in the calculation of the minimum offer amount? | |
