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Question about an Offer in Compromise with the IRS and a federal tax lien.

Sugar Land, TX |

I submitted an offer in compromise 6 years ago to the IRS for a tax obligation and it was rejected. I am currently on a payment plan they put me on. I also have 2 tax liens on my house because of this. Can I submit a fresh offer in compromise on this same obligation and offer significantly MORE than the last time I offered, because I am somewhat better off now than I was then and my current payment plan gets me nowhere, my balance never seems to go down because of penalties and interest.

Last time the tax place had me offer an unreasonable (in my opinion) $100 and it was rejected. I think I can afford to offer $9,000 on a $26,000 debt if I am doing the worksheet correctly.

Attorney Answers 4

  1. Offering MORE isn't necessarily the answer to getting an OIC accepted. Since the IRS looks at the totality of your circumstances when evaluating an OIC, it is inaccurate to think of low offers as having a low likelihood of acceptance and high offers having a high acceptance rate. You need to consider hiring an experienced tax attorney to help you with your OIC this time around. Of course, if you are better off now, it may be that an Offer is out of the question. Find an attorney who will do a free consultation so you can find out what your options are before you hire.

    This response should not be considered legal advice. No attorney-client relationship is formed by this response, which reflects only the opinion of the author. The response should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question and could change if additional facts were made available.

  2. Statistically speaking, the IRS rejects approximately 80% of all Offers in Compromise filed annually. Thus, the odds are not in the taxpayers' favor to begin with. Essentially, the IRS looks at your financial ability to pay the tax liability. If you can afford to make monthly payments, and if those monthly payments calculated for the remainder of the statutory collection period, exceed the amount of your offer, your offer will be rejected. Give us a call; I should be able to determine whether you have a good chance of success if you file a new offer now. But if you believe you can afford to make monthly payments, chances are, the IRS will take the same position as well. The IRS will not settle for less than your tax balance, unless the IRS is convinced that you truly cannot afford to make monthly payments.

    My response to any question on this site is not, nor is it intended to be, legal advice, and it does not establish attorney-client relationship. I invite you to contact me and welcome your calls and emails. However, contacting me does not create an attorney-client relationship. Please do not send any confidential information to me until such time as an attorney-client relationship has been established.

  3. You can always submit a new Offer in Compromise. But to get one with any chance of success, you need to be pretty asset and income poor. Doubt as to Collectible is a very rigid calculation that considers everything including your 401k and IRA. As Attorney Rich points out, once your offer falls below what they consider your means to pay, your chances are better finding a unicorn in your yard tomorrow. To not consider all of your assets, is to ask for one under Effective Tax Administration. Those generally have a less than 5% chance of succeeding.

    It is important that you have one prepared by somebody that knows what they are doing. I have seen too many taxpayers prepare their own, and they end up with something that looks like a hybrid between Doubt as to Collectible and Effective Tax Administration, and gets reviewed as the latter. If you want to have ANY chance of having it accepted, your numbers and your offer number better jibe. If they don't, forget about it and save yourself some time.

    Christopher Larson
    Insight Law

  4. The answers above are correct for the most part. I would only add that the OIC calculation is set by the forms. The firms that advertise that they settle everything for pennies on the dollar are probably lying. If you have time, go to the IRS website and download the new form 433-A(OIC). It should give you a good idea of what the minimum offer should be.

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