The IRS 2012 Offer in Compromise Rule Changes: Offer up to 75% less?!
Washington Tax Services and our numerous clients were pretty stoked by the IRS rule changes for the Offer in Compromise instituted in 2012. While there are a number of small changes that are relevant - the biggest change is the computation of disposable income.
48 months reduced to 12 months.
Previously , you were required to pay the equivalent of 48 months of future disposable income
Now you are only required to offer 12 months of disposable income.
This is a huge reduction for most taxpayers. For example -- a taxpayer with $800 of disposable income - (with no serious assets and who can't pay his debt within the Collection Statute). would qualify previously for a settlement of $38,400.
Now - $9600.00.
State payments now allowed
About 10 years ago or so our staff was shocked when the IRS Offer dept. sent out a memo saying State tax payments were NOT considered allowed for IRS Offer purposes. It seemed pointless...if you have to pay the State you have to pay the State. Well - sober minds prevailed as they reinstituted this provision.
Dissipated Assets -- time frame reduced
If you sell or transfer an asset and you do an Offer in Compromise - the IRS considers that still an asset - albeit a dissipated asset. The time frame they previously looked at was 5 years. That has been reduced to 3 years.
There are other changes which our staff can explain to you when you call us at 1-888-282-4697.
- When Do Your Back Taxes Expire? A Quick and Easy Test to See if you Qualify for an Offer
- The IRS 2012 OIC Rule Changes: Offer up to 75% less?!
- An Unauthorized Biography of the IRS Offer in Compromise
- How Washington Tax Services Does the “Offer” Interview / The Income / Expenses / Assets Model
- Offer in Compromise—How Long Does it Take to Process?