Offer In Compromise for IRS debt 100K

[Strongsilence-CPA]

Do any of the firms that offer to help actually do what they say?  These firms that offer Fresh Start are examples.  My client owes130K to the IRS.

[sjrcpa]

I would not go to one of the ones that advertises on TV. They charge large upfront fees and deliver little or nothing in return. One woman (Roni Deutsch  in California) faced numerous allegations/suits and can no longer practice law.

I would seek out a local CPA or law firm that specializes in this area.

In order get an OIC accepted, there must be doubt as to liability or inability to pay. Never seen the first, and inability to pay is rare in the eyes of IRS.

[abctax55]

I did one (OIC) decades ago, for the son of good friends.   It was accepted.  This was long, long ago before I understood that I wasn't necessarily 'qualified' to do one ;-).  Plus, I didn't charge him for it.

I tried a 'not currently collectible' for an elderly client - it was mainly plugging in numbers as to current income (nothing but social security...) and living expense.  Again, pro-bono.  He ended up with the ultimate tax shelter (death) before the IRS passed judgement.

These days, I'm sure the process is more involved & I wouldn't even try either again.  I have an attorney contact in a near-by city that I used to refer folks to.  He ain't cheap but gets good results.

I agree with Susan - those advertising on T.V. are basically snake oil salesmen.  IMHO anyway.

[abctax55]

I think Roni Deutsch operated out of Sacramento...I remember the news coverage.

[IRonMaN]

But if you see them on TV they have to be really good because their commercials are often followed by things like the Popeil pocket fisherman.  Nothing says quality more that a sleazy TV commercial.

[Strongsilence-CPA]

 I wasn't necessarily 'qualified' to 

Is there specific knowledge or training needed?

[BobKamman]

You don't have to be very smart to prepare an OIC because the people who review them at IRS are not very smart either.  They just follow instructions.  How much can the taxpayer raise by selling assets or closing bank accounts?  And how much can the taxpayer pay with expected income and allowable (not actual) expenses?  Just fill out forms, like everything else involved with tax work.  You can usually rule out any chance of acceptance, with some preliminary work.  If it still looks viable, do it yourself as a learning experience or farm it out to someone who practices mostly in collection work.  If you're in (or near) California, I can suggest someone.  

[abctax55]

"....Is there specific knowledge or training needed?"

I didn't have any, but neither did I have:

1) experience with it

2) a mentor to help me.

I was a lot younger & stupider then 😉  

He did get what he paid for tho.

[abctax55]

@BobKamman 

I do remember them being very 'mechanical'  - entering numbers/doing the math.  And I seem to remember there are 'standards' to use for living expenses based on location?  

@Strongsilence-CPA 

I did it by reading the instructions/following the forms.  

[sjrcpa]

I don't know if they are still based on location, but even if they are, they are extremely low.

[abctax55]

Susan... I do remember that they were low (being in a resort area, in CA - REALLY low compared to actual).

[BobKamman]

The allowable expenses may have been updated to more reasonable amounts in recent years -- and sometimes, you can try to make the case for higher ones.  

[TaxGuyBill]

It all depends on the taxpayer's circumstances.  For example, many of the taxpayer's assets will affect things.  The amount of their current/recent income also affects things.  So a taxpayer with a lot of usable assets and/or high income may not qualify at all.  But a taxpayer will few assets and low income could possibly qualify to waive most of it.

There are definitely nuances and strategies that can be used, so an expert in OICs can often get the best results.  But for the basic OIC, there are third party software providers that can walk you through everything.  One popular one is PitBullTax ($195 to buy it for one client).

But as I said, an expert can often get a better result by applying certain strategies.  For example, if I remember correctly, if the taxpayer uses any existing money/assets to pay off the State amount owed, that will allow a better Federal OIC because they have less money/assets.