Hear What Randy has to say on Offer in Compromise!

The Internal Revenue Service has had the ability to compromise liabilities owed to the United States Government for many many years. This taxpayer benefit has been applied inconsistently to taxpayers around the country. It has been a process known to only a few and usually benefited only the well-connected and wealthy taxpayers of the country. For example, even in the nineties, taxpayers in Florida were denied this benefit until knowledgeable taxpayer representatives forced the issue through the use of elected representatives. Even today, if you live in Arizona, you will be denied a speedy resolution of your Offer in Compromise. The managers of the various IRS Districts have been accustomed to setting their own priorities and many of them do not relish cutting deals with taxpayers regardless of the benefit to the Government and the taxpayer. The government centralized submission of offer in compromise to two locations, but that has not lasted. The offers are either returned or farmed out to various sub-offices, just like before.

For many years there were two types of offers:

• Offer in Compromise on Basis of Liability
• Offer in Compromise on Basis of Collectibilty

In 2000 another category was added:

• Offer in Compromise on Basis of Effective Tax Administration

A layman might think "Well, it seems everyone is getting a deal on their taxes. I think I'll offer, say, twenty cents on the dollar."

Sorry, it just doesn't work that way. The great majority of taxpayers will have to pay their taxes in full. Submission, negotiating, and winning acceptance of an Offer in Compromise is more art than science. Many variables outside the control of the taxpayer impact the decision.

Here are a few historical variables in offers on the basis of Collectibility.

• Training and temperament of the Offer Specialist at the IRS assigned to the case.
• The county, state, and IRS District controlling the offer.
• Some Counties are difficult because of unrealistically low standard expenses published by the IRS.
• Some states of residence experience much longer waits for IRS decisions. Arizona has been a real problem.
• Some IRS Districts flaunt the rules and the law. Florida is rife with Revenue Officers working their own agendas.
• The collection chiefs in some districts (Oklahoma for example) have been known to measure the success of their employees by the number of seizures completed, negating the purpose of an offer.
• Changing circumstances can greatly impact an offer.

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