We receive calls every day from taxpayers who owe the IRS and are concerned about their ability to pay. While the IRS is demanding immediate action, the client is facing liens on their property, paycheck levies, and a reduced quality of life. So they may hear a commercial advertising offers in compromise (OIC) for “pennies on the dollar” debt reduction, where the IRS forgives a great portion of their debt. They may hear of “Fresh Start Initiative.” Is it reasonable to believe the promises of these advertisements? The truth – no company should make a promise about any anticipated result. It’s not ethical. We as representatives can assist you in delivering an optimal offer package to IRS collections. However, most offers in compromise are not accepted by the IRS. And trust us, the IRS is not going to wipe away debt and give you a “fresh start” because they are nice, forgiving people. Their job is to collect tax revenue – our job is to facilitate an agreement in your best interest.
There are other strategies to use that will be more cost-effective for you. For example we have had much success with partial pay installment agreements. We advise our clients to take certain steps in the months leading up to submission of the paperwork. By taking certain steps, the client is well-placed to have their partial pay accepted, even if they are a poor candidate for an OIC.
The IRS’s website suggests that taxpayers should work directly with the IRS when negotiating a payment plan – which is fine if the client owes less than $10,000. However, if the client owes $500,000 from unfiled taxes in 2017, and is in a stressful financial situation due to a closed business, divorce, or illness, the IRS is not going to be sympathetic and assist that client in paying less than they owe. The IRS’s job is to collect money to fund the government! Why would they suggest a client pay less than they owe?
Our knowledge and experience is invaluable in assisting client who owe large sums. Did you know that the payoff amount in the letters you receive are often wrong or miscalculated? Did you know that the IRS has secret records about your debt that are not available to you – records that are not found on your account transcript and have to be specifically requested by name from the collections office? Do you think the IRS would suggest you purchase a health insurance policy for yourself so that you might qualify for a lower payoff amount? How about explaining to the collections agent why a certain expense is necessary, even though it exceeds the amount generally allowed in the Internal Revenue Manual, because of a special circumstance? Whether or not filing separately from a spouse might be in her best interest and protect her from collections?
Real case example: In the past few weeks, Bryan successfully saved a client $750,000 in unpaid tax liability – and we didn’t use an Offer in Compromise. Bottom line: Don’t believe the national OIC mills that promise more than they ought to. OIC isn’t necessarily in your best interest and might cost you thousands of dollars. Using these national chains can be a disaster as they disappear once the offer has been submitted. We stay with you for the long game. If you are concerned about your tax situation, give us a call and make a no-obligation appointment (513) 900-9513.