Many professional tax practitioners are experiencing dismissal results with the Offer in Compromise program. his program is a viable alternative for solving clients’ Internal Revenue Service liabilities. I disagree with those who insist that it is an impossible path to resolution. Frankly, my acceptance rate is impressive. It is impressive because I weed out those potential offers that got “rejection” written all over them prior to processing.
When I review the potential Offer in Compromise case, I lay it out to the client/taxpayer on the first consultation (should they have the proper documents) what I see as their chances for acceptance. An Offer in Compromise is impossible to achieve without proper case selection and meticulous strategic planning.
Because one may have enough to pay for professional fees for processing, an offer is a long way from actually obtaining acceptance.
The only fast and sure way of resolution to a collection case is full payment of tax interest and penalties. Any other option, such as an installment agreement, abatement of tax, reasonable cause to abate penalties, appellate review, filing claims, filing amended returns, applying for emergency fund releases, lien releases (without full payment) and bankruptcy is a process, and oftentimes a very lengthy one.
Some clients, even with the most sophisticated and exhaustive planning, will never qualify; and these clients should be forewarned by the tax professional. Depending of course on the circumstances, the acceptance may not happen. Try another route.
To obtain relief from income tax liabilities, Chapter 7 bankruptcy may be the only solution. Further, even taking this route in order for the taxes to be discharged the tax returns must have been due for three years, and other stipulations apply as well.
Additionally, another choice is to simply wait for the statute of limitations to expire. The statute of limitation in collections is 10 years. After 10 years the IRS must stop collection unless the taxpayer has signed a waiver.
In conclusion, it is not that the OIC can’t be accepted; however; it is important to understand that under the current rules, it requires much planning and the statute for collection will be extended.
If you qualify for the offer in compromise, the relief is immeasurable.
Alma M Scarborough, is the principal of Scarborough’s Tax Affair, Inc., a former Revenue Officer and Instructor, on the job Trainer, Offer in Compromise Specialist, Trainer Coordinator and Tax Fraud Investigative Aide- Criminal Investigation Division for the Department of Treasury, Internal Revenue Service.
1221 Locust Street, Suite 600, St. Louis, Mo., 63103, Phone: 314.621.1402
