Contemplating an IRS Offer in Compromise? 6 tips that will help your cause

bear down-thumb-375x375-63025If you have IRS tax debt, I don’t care what you say, you have been contemplating an IRS Offer in Compromise.

You are searching the internet, reading every article you can find. You have probably spoken to a few tax “resolution” companies to get a sense of fees and process.

A basic understanding about how the IRS offer program works is easy to find, so here are a few things that you may not be aware of that will increase your chances of successfully completing an Offer.

1. Make sure you are currently withholding enough tax

If you are self-employed, you must make sure that you are making your quarterly payments correctly. If you are a wage earner, you should do a “fake” tax return and make sure you are withholding enough from each paycheck to guarantee you won’t owe when you file the return next year.

If you don’t make sure you are current, the Offer will be rejected. The IRS will think that the problem will continue and that you just can’t follow the rules.

2. File all tax returns that need to be filed

If a return is missing from your history and the IRS is looking for that return, it won’t consider the offer in compromise until the return appears in its basket.

You must find out which returns are missing, which returns the IRS cares about, create them and file them.

3. Prove your Case

I know…paperwork is a real pain. The key to a successful OIC is paperwork though. So you need to “bear down” (the strange motto of the Arizona Wildcats down south) and gather proof of almost every budget item and income source you are using to make the argument.

You will need at least 3 months and sometimes more of each required item.

Get to work.

4. Honesty

Dishonesty with the IRS is dangerous for reasons other than a lost Offer in Compromise. The financial statement you are filing is being provided under oath and you are subject to perjury charges if you intentionally leave something out or place something in that is false.  If you file a bankruptcy later, the financial statement you previously provided the IRS can be reviewed and issues can arise if something was input incorrectly on purpose or not.

The other problem with over-manipulation of the data is that it something won’t make sense when the IRS looks at the big picture.

A common example of this is when the Offer filer provides a budget that is higher than her income. Either the calculation is wrong or something is rotten in Denmark. The IRS will figure out that someone isn’t disclosing income from a side job and the case blows up or worse.

I tell my clients, “the financial statement has to make sense”.

The IRS is used to seeing financial statements and its employees can smell a rotten story from a few miles away.

5. Determine whether or not the debt would be dischargeable in bankruptcy

The IRS is required to consider the fact that it may get less if it rejects the offer and you file for bankruptcy. We will often work up a complete bankruptcy case and present it to the IRS during the Offer. This shows the IRS exactly what it will get if you file.

6. Cooperate

I know that the situation is aggravating and you will be working with government employees who are part of a giant miserable machine. Most of them know it and are aware as well that you have been waiting months to get the situation resolved.

It will help your case as a result to simply…cooperate. Provide stuff. Explain stuff before it needs explaining (with the advice of counsel preferably).

If the person you are dealing with senses that you are a nice person and just want the law to provide you a way to move on with your life, it should…play in your favor.

Michael Anderson, Tax Lawyer In ArizonaWritten By:

Anderson Tax Law
2158 N. Gilbert Rd. Ste 101
Mesa, Arizona 85203

Phone: (480) 507-5985
Fax: (480) 507-5988
Email: [email protected]


IRS Levy – IRS Froze my Bank Account – When Can I Use it Again

icicle-thumb-375x281-62472A common concern once the IRS Levies or “freezes” a bank account is whether it will remain in place as to all future deposits. In other words, can the frozen account still be used to make deposits and pay bills?

The good news is that the IRS Bank Account Levy only freezes the money that was in the account at the time the levy was processed.

If you have $500.00 in the account tomorrow and the levy is fully processed tomorrow, the bank will freeze $500.00.

If the next day you make a deposit of another $500.00, that money is your own and the bank should not freeze it. The levy was complete when first $500.00 was frozen. The IRS would have to issue another levy.

If someone asks you, the same question above then your answer is…”An IRS levy is not a continuous levy on your bank account”.

Video: Tax Attorney In Mesa Michael Anderson
Explains Frozen Bank Accounts

A lot of people ask their Mesa tax attorney about their bank account when it has been frozen by the IRS,
and specifically when can they use it again?

The follow up question is whether or not the IRS will issue another levy on the bank account?

One after another isn’t common, but…it could happen and I tell clients to just get the situation worked out so that all collection activity is stopped.

It is also important to know that when the bank freezes the funds, it must hold them for 20 days before mailing the dollars to the IRS. This provides some time for you to try and get the money placed back into the account.

In the end, the IRS is really just trying to rattle your cage when it grabs a bank account. If you have a serious tax debt and have been hit, you need to use the levy as extra motivation to get the entire situation analyzed and solved via a negotiated plan, offer in compromise or even bankruptcy.

Michael Anderson, Tax Lawyer In ArizonaWritten By:

Anderson Tax Law
2158 N. Gilbert Rd. Ste 101
Mesa, Arizona 85203

Phone: (480) 507-5985
Fax: (480) 507-5988
Email: [email protected]