Hear What Randy has to say on Offer in Compromise!

• Unless you have seen many offers, there is no way even an informed taxpayer can evaluate what is going on.
• Professional representatives who deal daily in these matters can pull a rule or regulation to the client's benefit in one jurisdiction to another jurisdiction, challenging the decision of the player at the IRS. There is no way a taxpayer or inexperienced representative can know these things. They are published nowhere.

Offer in Compromise is generally accepted where:

• There is a high probability that they don't owe the tax and other methods of appeal are not available such as tax court, abatement, etc. This is Offer on Basis of Liability.
• The taxpayer cannot afford to pay in full based on an inflexible set of rules for allowable expenses. This is Offer in Compromise on Basis of Collectibility.
• The taxpayer doesn't qualify under the above two examples, but the money for the taxes is needed to support the life or health of the taxpayer or a member of the household the taxpayer supports. For example, a child with brain cancer who has exhausted the available medical insurance yet requires additional hospitalization or other urgent care. This is Offer in Compromise on Basis of Effective Tax Administration.

The Risks in Submitting Your Own Offer in Compromise

An Offer in Compromise is prepared and submitted as instructed in the new 64 pages of forms and instructions (You will need the Adobe Acrobat Reader to view these documents). Supporting documentation must now be supplied with the original submission. Based on the submission, the IRS will determine if the Offer in Compromise is "PROCESSIBLE" If it is not processible it will be returned to the preparer so indicated. This does not mean it has been rejected. It only means that it must be reviewed and corrected to bring it to a processible state. Processible means it appears on the surface that an offer might be possible. IRS personnel will then put your offer in the hopper for investigation. This means that one day in the future from 60 days to 5 years later, the IRS will want to discuss, investigate, negotiate and try to kill your offer. Remember, IRS personnel are enforcement officers, THEY CANNOT BE YOUR FRIEND. If the IRS is dealing directly with a taxpayer, the taxpayer is at the mercy of the particular offer specialist at the IRS as to whether or not they will give the taxpayer a break. The taxpayer, being naturally nervous and apprehensive, will undoubtedly make many mistakes in pushing his own case with the IRS. Remember, if you say it, or even if the IRS thinks you say it, you are stuck with it. That is why so much of the communication with the IRS Offer Specialist MUST BE IN WRITING, CHECKED, DOUBLE CHECKED, AND CHECKED ONCE MORE. The impact of the answer must be fully understood by the taxpayer or representative. There are countless tricks and traps to blow an offer out of the water. For example, a call comes in from the IRS: "Just have a few questions to finalize this offer. Say, did you get a raise last year? How much? Your wife? (Combined increases of $120 per month on gross W-2 income of $3,600 per month) Wow, that was a nice increase. Thanks, that's all I need." Two weeks later a rejection letter comes from the nice man stating: "Sorry, but we cannot accept your offer in compromise due to the high probability of future increases in income." Ok, you're the taxpayer negotiating your own offer in compromise. What do you do now? See the following pages for more information.

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