IRS Offer in Compromise

What is the name of your state? HI

I filed an IRS Offer in Compromise in 10/05. This month, (1/07), an IRS Offer Specialist has written twice that she will recommend to reject my Offer. She will say I am liable for over $200,000 because I received that from the sale of an asset and she believes I made a choice not to pay income taxes and that not all of the funds were for "necessary living expenses". The funds have been completely spent and have been utiliized for business, legal, and living expenses. I have no income, no assets, lots of debt, a lawsuit pending against me, no credit available, ill health, and no future income prospects. IRS has also filed 3 tax liens against me.

My goal is to get this debt eliminated and resolved, not just delayed for up to 10 years (the time I read that IRS can pursue the collection process).

My questions:
1. Should I write a second letter to the Offer Specialist pleading that I have no ability to pay, this a current hardship case, and I want the correspondence added to my file?

2. Should I request a "Collection Due Process Hearing" on the rejected Offer in Compromise based on the fact I can not pay?
(My understanding is that the best that will do is get them to delay collections until I can pay)

3. Should I just let it go into Collections uncontested? (My concern there is whether I would be missing the opportunity to reduce the dollar amount the IRS says I owe -by contesting the Offer. )

4. If it goes into Collections, and I have no ability to pay, would IRS most likely give up on it as a hardship case with an inability to pay or would they just freeze the collection activity for up to 10 years hoping that they might collect later?

5. The IRS just filed 2 tax liens before the Offer has been formally rejected. (The Offer Specialist just said she would recommend rejecting the Offer to her group manager.) Isn't that in violation of IRS Collection procedure to issue new liens during the Offer process?

6. Should I utilize the "Taxpayer Advocate Function" assistance? (I really don't know if they can be effective for me in this situation.)

7. Any other brilliant ideas that don't require paying any funds for advice? ( I went to Legal Aid and they said they couldn't help me because they weren't involved in filing the Offer.)

Thanks in advance for any input!!!!!What is the name of your state?

If you came into our office, even if you were a long-standing client, we would send you on to someone else. Anyone with a $200K IRS bill out there who is not getting professional help is a fool. Not just professional help either. A professional who has experience in OICs.

To the question, know that the government doesn't much like being placed second in line for getting paid. They understand if you used the money to pay for food or other "necessary living expenses", but don't much understand why you would pay your lawyer or your paper supplier over them. That's why your OIC will not be accepted and why you are in a big 'ol passle of trouble. Think what you like, but the government will take your stuff until the debt is paid. Not having cash is not the same as not having stuff.

1. Should I write a second letter to the Offer Specialist pleading that I have no ability to pay, this a current hardship case, and I want the correspondence added to my file?

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No. There is a proceedure to follow if there is a substantial change in circumstances. A letter in the file is not it. (I don't know what it is without research. That's what a professional with experience can tell you.)

2. Should I request a "Collection Due Process Hearing" on the rejected Offer in Compromise based on the fact I can not pay?
(My understanding is that the best that will do is get them to delay collections until I can pay)

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While I think it is unlikely in this circumstance, I'm not sure it will hurt. But, see a professional with experience in OIC to be sure.

3. Should I just let it go into Collections uncontested? (My concern there is whether I would be missing the opportunity to reduce the dollar amount the IRS says I owe -by contesting the Offer. )

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You have already contested the dollar amount. I don't think you get a second bite at the apple without following the proceedure. But, see a professional with experience in OIC to be sure.

4. If it goes into Collections, and I have no ability to pay, would IRS most likely give up on it as a hardship case with an inability to pay or would they just freeze the collection activity for up to 10 years hoping that they might collect later?

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No. They will try to collect all they can. They will levy anything they can get their hands on. Bank accounts, property, garnish wages or contract payments and part of social security are all open to them. I bet their thoughts on your ability to pay is far different from yours. To see what assets you have and what income the will take, see a professional with experience with OIC.

5. The IRS just filed 2 tax liens before the Offer has been formally rejected. (The Offer Specialist just said she would recommend rejecting the Offer to her group manager.) Isn't that in violation of IRS Collection procedure to issue new liens during the Offer process?

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I'm not sure of the timing issues involved or if a lien is a "collection activity", but, say you could get the liens removed. What then? They're just going to refile them.

The others are much the same. I know you don't like the idea that you need to pay a professional, but that is your only chance. For the amount you have out there, the IRS will be very aggressive in trying to get their money. They will not understand why you paid others before you paid them.

Dear tranquility,

Thank you so much for taking the time, energy, and cador in answering my questions in detail.

I paid a OIC tax professional to handle the OIC. Despite numerous requests and $5,000 wired to him, after two years he failed to complete the process. I followed his advice during up until he abandoned me.

As I mentioned, I have no assets or credit or would be spending my last dime to hire another professional.

Again, thanks for your input. If you know of any way I can retain the services of a professional without any cash upfront, please please let me know!

Depending on the professional's license, you may be able to file a complaint for failure to represent you with the state or the IRS (enrolled agent). Dig out your original contract to see what the terms of service were.

Dear Abezon, Thank you!

Dear Abezon, Thank you!