Did it again! Settled Taxes with an Offer in Compromise
Who did your offer in Compromise - What were they thinking?
Now as I promised this is the latest war story. Of course before you read this, I am warning you that it is my bragging forum. So if you can't take me feeding my ego, then stop right here. On the other hand you might learn something or stimulate a new idea.
About a month ago I got a call from a CPA who is a friend of mine. I will call him Ron but that is not his real name. He had submitted an offer in compromise for a couple and the Offer Specialist had rejected the offer and countered with an offer to settle for $45,943. The taxpayers owed about $86,000. The couple could not afford the $45,000 counter offer. Ron the CPA did not know what to do and asked for my help. I had him fax over the IE and AE Tables that the Offer Specialist sent with the rejection letter. The worksheets showed $8,647 in equity in assets, future income of $37,296, and no retired debt. (Hence the 45,943 counter offer) Ron had offered $4,500 for to settle the taxes in full and solve the couple’s tax problems. I looked at the worksheet for a few minutes and told Ron what I thought. He told me that he would rather I handle the matter and sent the couple to see me.
The couple came to see me. The husband was on disability and the wife was a school teacher. They had one minor child and the wife had a small business on the side.
The AET showed $5,347 in a bank account. I challenged the inclusion of this amount on the AET. Turns out that this account was in the name of the minor child with the child’s social security on the account. The majority of the funds in the account could be traced back to SSI income to the child, which she received as a result of her father’s disability.
The AET also included $1,300 equity in a 2000 Chev Blazer and $1,200 equity in a 1991 Ford F150 pickup which was valued at $2,500. I challenged the $2,500 Net Realizable Equity in the vehicles. The couple had traded the 2000 Blazer for a 2005 Tahoe when GM had employee discount for everyone sale. There was no equity in the new vehicle. I also challeneged the $2,500 value placed on a 15 year old pickup truck.
The IET showed a Future Income Value (Present Value of an Installment Agreement, also fondly referred to by the acronym PVIA) of $37,296, which was based on 48 times the installment amount of $777.
Included in the income and consequently the installment amount of $777 was the SSI income of the minor child. The child was receiving $544 per month in SSI payments. I challenge the inclusion of the SSI payments to the minor child.
The original IET had allowed only $960 for transportation. I argued that since wife’s old car became undependable and she was required to purchase a new one that the transportation allowance should be increased to reflect the increased monthly note on her new vehicle. This increased the allowable transportation expense by $51 and decreased the Reasonable Collection Potential by $2,488. (Hey every little bit helps)
When I met with the OIC Specialist, he agreed to the increase in transportation allowance, the change in equity in the vehicles, to remove the kids SSI income, and to lop off most of the kids bank account ( all but money deposited by the couple). Any way the out come was........ (drum roll) $7,040. I got the OIC Specialist to agree to settle the taxes and solve my clients tax problems for a measly 7 grand. I saved my clients over $39,000 in on the offer in compromise more than the CPA had done with his best offer. NOT BAD. My clients thought so too.
compromise tax settlement Tax Attorney Irs Levy IRS Lien Irs Problems
Now as I promised this is the latest war story. Of course before you read this, I am warning you that it is my bragging forum. So if you can't take me feeding my ego, then stop right here. On the other hand you might learn something or stimulate a new idea.
About a month ago I got a call from a CPA who is a friend of mine. I will call him Ron but that is not his real name. He had submitted an offer in compromise for a couple and the Offer Specialist had rejected the offer and countered with an offer to settle for $45,943. The taxpayers owed about $86,000. The couple could not afford the $45,000 counter offer. Ron the CPA did not know what to do and asked for my help. I had him fax over the IE and AE Tables that the Offer Specialist sent with the rejection letter. The worksheets showed $8,647 in equity in assets, future income of $37,296, and no retired debt. (Hence the 45,943 counter offer) Ron had offered $4,500 for to settle the taxes in full and solve the couple’s tax problems. I looked at the worksheet for a few minutes and told Ron what I thought. He told me that he would rather I handle the matter and sent the couple to see me.
The couple came to see me. The husband was on disability and the wife was a school teacher. They had one minor child and the wife had a small business on the side.
The AET showed $5,347 in a bank account. I challenged the inclusion of this amount on the AET. Turns out that this account was in the name of the minor child with the child’s social security on the account. The majority of the funds in the account could be traced back to SSI income to the child, which she received as a result of her father’s disability.
The AET also included $1,300 equity in a 2000 Chev Blazer and $1,200 equity in a 1991 Ford F150 pickup which was valued at $2,500. I challenged the $2,500 Net Realizable Equity in the vehicles. The couple had traded the 2000 Blazer for a 2005 Tahoe when GM had employee discount for everyone sale. There was no equity in the new vehicle. I also challeneged the $2,500 value placed on a 15 year old pickup truck.
The IET showed a Future Income Value (Present Value of an Installment Agreement, also fondly referred to by the acronym PVIA) of $37,296, which was based on 48 times the installment amount of $777.
Included in the income and consequently the installment amount of $777 was the SSI income of the minor child. The child was receiving $544 per month in SSI payments. I challenge the inclusion of the SSI payments to the minor child.
The original IET had allowed only $960 for transportation. I argued that since wife’s old car became undependable and she was required to purchase a new one that the transportation allowance should be increased to reflect the increased monthly note on her new vehicle. This increased the allowable transportation expense by $51 and decreased the Reasonable Collection Potential by $2,488. (Hey every little bit helps)
When I met with the OIC Specialist, he agreed to the increase in transportation allowance, the change in equity in the vehicles, to remove the kids SSI income, and to lop off most of the kids bank account ( all but money deposited by the couple). Any way the out come was........ (drum roll) $7,040. I got the OIC Specialist to agree to settle the taxes and solve my clients tax problems for a measly 7 grand. I saved my clients over $39,000 in on the offer in compromise more than the CPA had done with his best offer. NOT BAD. My clients thought so too.
compromise tax settlement Tax Attorney Irs Levy IRS Lien Irs Problems
1 Comments:
10-21-07. I'm no CPA but that CPA needs a refresher course in figuring out deductions: SSI? Old vehicle vs new? Dad disabled!
Just my opinion!!!!
Post a Comment
Links to this post:
Create a Link
<< Home