Tax Seminar #3 – December 3 2012

(2) The Trust fund portion of the tax liabilities must be paid or
the TFRP either assessed or forwarded (by collection) for
assessment before the corporate offer may be evaluated.
IRM 1.23.3.6.1 (8-28-2009)
10. Pros and Cons:
a. Pros: an OIC allows for the full satisfaction of an outstanding tax
debt for less than the full amount.
b. Cons: Very hard to get accepted
(1) The statute of limitations is extended:
(a) During the pendency of the Offer, including appeal
(b) While the terms of the Offer remain unfulfilled
(c)
(d)
For 30 days following the rejection of an Offer
For one year in addition to the total of the periods
listed above.
11. Requirements for OIC:
a. Completed Form 656;
b. Taxpayer must not be in bankruptcy;
c. Taxpayer must be in compliance with all filing and tax payment
requirements;
d. Submit $150 processing fee;
e. Lump Sum Payment - Pay 20% non-refundable payment required
at time of offer; (this payment is non-refundable if the Offer is
rejected)
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f. Periodic Payment - Pay 1 month of Offer (while the IRS considers
the Offer, the taxpayer is required to make the monthly offer
payments)
12. Types of Offers:
a. Lump Sum Cash Offer
(1) Net Disposable Monthly Income x 12 months + Value of
Assets
(2) Must be paid within 5 months or less
b. Periodic Payment Offer
(1) Disposable monthly income x 24 months + Value of Assets
(2) Must be paid within 2 years from date that Offer is deemed
processable.
13. Effective Tax Administration v. Public Policy: An Offer may be accepted
if the taxpayer establishes that collection would create an economic
hardship or would be unfair. However, an Offer can be rejected if public
knowledge of the accepted Offer would be seriously detrimental to
voluntary compliance.
14. Tax Updates
a. On February 24, 2011, the IRS announced a series of new steps to
help struggling taxpayers get a fresh start on their tax liabilities.
See IR-2011-20.
(1) Increasing the dollar threshold when liens are issued,
resulting in fewer liens.
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