Continuing Saga: Dissipated Assets
The Internal Revenue Manual very clearly requires that justification for the inclusion of dissipated assets in the offer amount must clearly be documented in the case file.
The documentation of the justification for inclusion of dissipated assets should include an analysis of the following facts:
1. When the assets were dissipated in relation to the offer submission,
2. How the asset was dissipated,
3. If the taxpayer realized any funds from the dissipation of assets,
4. How any funds realized from the dissipation of assets were used,
5. If the funds or any portion thereof were recoverable by the IRS or the taxpayer, and
6. The value of the dissipated assets and the taxpayer's interest in those assets.
The IRS manual clearly requires the offer examiner or the Offer Specialist to investigate and consider these factors when determining the wheter to include the value of the dissipated asset in the offer amount. However, in my experience the Offer Examiners at COIC have been given little discretion and are told to include any possible dissipated asset in the offer amount without conducting the analysis required by the manual.
I suspect something is going on at the IRS and that this ill practice is not coming from higher up, but rather is at some mid level management position. My guess is that some goal as to the number of processed OICs is at the bottom of this. Perhaps they are looking for a certain rejection rate or have a quota of offers to work completely and finding dissipated assets is the easy way out by suggesting full pay. There are people who know, but they are not talking. I am trying to get to the bottom of it but as it is with anything at the IRS internal information can be hard to come by. Next time, more discussion on dissipation of assets: examples and exceptions.
Learn more about how to qualify for an offer in Compromise by finding out the 5 Steps to Qualify for an offer in Compromise
The documentation of the justification for inclusion of dissipated assets should include an analysis of the following facts:
1. When the assets were dissipated in relation to the offer submission,
2. How the asset was dissipated,
3. If the taxpayer realized any funds from the dissipation of assets,
4. How any funds realized from the dissipation of assets were used,
5. If the funds or any portion thereof were recoverable by the IRS or the taxpayer, and
6. The value of the dissipated assets and the taxpayer's interest in those assets.
The IRS manual clearly requires the offer examiner or the Offer Specialist to investigate and consider these factors when determining the wheter to include the value of the dissipated asset in the offer amount. However, in my experience the Offer Examiners at COIC have been given little discretion and are told to include any possible dissipated asset in the offer amount without conducting the analysis required by the manual.
I suspect something is going on at the IRS and that this ill practice is not coming from higher up, but rather is at some mid level management position. My guess is that some goal as to the number of processed OICs is at the bottom of this. Perhaps they are looking for a certain rejection rate or have a quota of offers to work completely and finding dissipated assets is the easy way out by suggesting full pay. There are people who know, but they are not talking. I am trying to get to the bottom of it but as it is with anything at the IRS internal information can be hard to come by. Next time, more discussion on dissipation of assets: examples and exceptions.
Learn more about how to qualify for an offer in Compromise by finding out the 5 Steps to Qualify for an offer in Compromise
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