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Offer In Compromise advice needed

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CPD

Junior Member
What is the name of your state (only U.S. law)? Texas

I owe the IRS between $9,000 - $10,000 because when I filed my 2012 taxes, I did not include a distribution I took from my late father's beneficiary IRA. I fully knew what I was doing, and it was just a tough time in my life, being unemployed, and trying to get by. Anyway, I just didn't think the IRS would catch it, but obviously they did.

I was thinking about going to one of those tax debt settlement places, but I thought better of it. I am going to fill out all the appropriate paperwork and send in my application for an OIC to the IRS. I will be able to send them the necessary 20% of my offer and application fee! but I was really hoping somebody could give me some pointers when filling out the forms/application. Most importantly, how much should my offer be? I was thinking of offering $2,000 (to be paid in full within 5 months). Is that an appropriate amount? I make $90,000 a year, and I have a mortgage ($750), car payment ($350), and some pretty hefty credit card debt (trying hard to pay off quickly).

I really want to do good by this, but I just don't have the $9K to pay. I know the IRS only accepts 1/4 of all OICs submitted, but I'm hoping you can help me with my case.

I appreciate it in advance!

CPD
 
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LdiJ

Senior Member
What is the name of your state (only U.S. law)? Texas

I owe the IRS between $9,000 - $10,000 because when I filed my 2012 taxes, I did not include a distribution I took from my late father's beneficiary IRA. I fully knew what I was doing, and it was just a tough time in my life, being unemployed, and trying to get by. Anyway, I just didn't think the IRS would catch it, but obviously they did.

I was thinking about going to one of those tax debt settlement places, but I thought better of it. I am going to fill out all the appropriate paperwork and send in my application for an OIC to the IRS. I will be able to send them the necessary 20% of my offer and application fee! but I was really hoping somebody could give me some pointers when filling out the forms/application. Most importantly, how much should my offer be? I was thinking of offering $2,000 (to be paid in full within 5 months). Is that an appropriate amount? I make $90,000 a year, and I have a mortgage ($750), car payment ($350), and some pretty hefty credit card debt (trying hard to pay off quickly).

I really want to do good by this, but I just don't have the $9K to pay. I know the IRS only accepts 1/4 of all OICs submitted, but I'm hoping you can help me with my case.

I appreciate it in advance!

CPD
Unfortunately, I don't think that you have any hope of getting an OIC accepted. You would be better off asking for an installment plan. The IRS only accepts an OIC if they believe that the OIC will produce more money than they would be able to collect by other means, within the statute of limitations. You could easily set up a 4 year installment plan that would be affordable at your income level. Therefore they would have no reason to consider an OIC.
 

CPD

Junior Member
I would never be able to pay this back in 4 years, after mortgage, car payment, credit card debt and cost of living. Anyway, I will still give it a shot, as I will only be out the application fee.
 

LdiJ

Senior Member
I would never be able to pay this back in 4 years, after mortgage, car payment, credit card debt and cost of living. Anyway, I will still give it a shot, as I will only be out the application fee.
Seriously, you are spinning your wheels. If you don't get on an installment plan what is going to happen is that they are going to levy your wages, and believe me, you don't want that to happen. When they levy your wages they are allowed to take absolutely everything except the amount of your personal exemption x the number of people in your family.

Example:

You are paid biweekly so that makes your gross pay 3462.00 per pay period. Lets say that you are married with two children. So, 4 exemptions equals 15,600.00 divided by 26 pay periods is 600.00 per period. That would be ALL that you would get to keep of your pay, if your wages are levied.

If you get on an installment plan they would probably let you pay 200.00 to 300.00 a month. What position would you rather be in?
 

LeeHarveyBlotto

Senior Member
Congratulations on attempting to get your financial house in order in terms of getting rid of your credit card debt. That said, I think you're wasting your time on the OIC, and frankly as a taxpayer, hope so. There's no reason the rest of us need to effectively subsidize your debt reduction plan. Treat the taxes as a debt just like your credit cards, except it goes at the head of the line.
 

Zigner

Senior Member, Non-Attorney
$250 per month on $10k over 4 years would easily get it taken care of. You are making excuses.
 

davew128

Senior Member
Congratulations on attempting to get your financial house in order in terms of getting rid of your credit card debt. That said, I think you're wasting your time on the OIC, and frankly as a taxpayer, hope so. There's no reason the rest of us need to effectively subsidize your debt reduction plan. Treat the taxes as a debt just like your credit cards, except it goes at the head of the line.
I take exception to this. While I sometimes get OIC cases that I think have no shot, are a waste of time, or reflect a poor financial lifestyle, there ARE cases that are truly worthwhile.

Last year I worked on for a woman with serious mental illness who received significant cash and income from the sale of the rental property. Needless to say, neither her nor her ex-husband have any idea what happened to the money she got (ex being in the picture because he loves his mentally ill former wife), because the woman simply no longer has much capacity to track daily events in her life. Under FINANCIAL standards she had no chance at an OIC. Under the Effective Tax Administration criteria she was a perfect candidate, if only because to enforce collections in the manner the IRS can was going to make her a ward of the state at a mental health facility where the State of California was going to be required to deal with this from her pension income.

So while I understand the anger towards true deadbeats, not all tax debtors deserve scorn.
 

davew128

Senior Member
$250 per month on $10k over 4 years would easily get it taken care of. You are making excuses.
I tend to agree what with a $90k job, low mortgage payment and reasonable car loan payment.

OP, what you're not getting is that the IRS looks at you and says you're putting consumer debt ahead of your tax debt. Needless to say that's a no-no.
 

LeeHarveyBlotto

Senior Member
I take exception to this. While I sometimes get OIC cases that I think have no shot, are a waste of time, or reflect a poor financial lifestyle, there ARE cases that are truly worthwhile.

Last year I worked on for a woman with serious mental illness who received significant cash and income from the sale of the rental property. Needless to say, neither her nor her ex-husband have any idea what happened to the money she got (ex being in the picture because he loves his mentally ill former wife), because the woman simply no longer has much capacity to track daily events in her life. Under FINANCIAL standards she had no chance at an OIC. Under the Effective Tax Administration criteria she was a perfect candidate, if only because to enforce collections in the manner the IRS can was going to make her a ward of the state at a mental health facility where the State of California was going to be required to deal with this from her pension income.

So while I understand the anger towards true deadbeats, not all tax debtors deserve scorn.
I'm not sure what part of my post would cause you to infer that I was speaking in general terms. The OP admitted he didn't pay the taxes due and was hoping they wouldn't catch it. They did. He now makes good money. He should pay his bills. ALL of them.
 
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