Client Owes $66,000 is a realtor with 2 rental properties and another one gets

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    Raymond Garnsey

    My client owes $66,000.

    She has 2 children one with the man she is cohabitating with. She owns the house they live in and it is in her name.

    The rental income from the 2 properties she owns and anothe one she is in partnership in flucuates over the past 4 years as does her commission income.

    She only gave me a few pages from the CIS.

    I requestewd:

    1. Copies of bank statements for the last 3 months. They gave me 1 and 3 others that are transactions only with no mane.One account has a $45,000 balance but I can’t tell what it is associated with or if it’s personal.
    2. Proof of all current expenses for the last 3 months. They gave me a list with dollar amounts.
    3. Proof of all non-business transportation expenses.
    4. Proof of payments for health care and out-of-pocket expenses for the last 3 monts.

    Am I better off averaging the rental income and commissions for the past 4 years and dividing by 48 to get average monthly income.Then using the lesser of their monthly expense statement or the standardsto determine the income portion of RCP? Would it be better to put her into an 84 month installment agreement so we don’t have to provide financials? She oes for 2016 & 2017.

    It’spossible I might be able to get First Time Penalty Abatement for 2015 in the amount of $2,600.

    I’m stuck on how to proceed with this client given the number of properties and bank accounts.

    Thanks for your help.

    Christopher Carmona

    I’m new at this too but I enjoy geeking out and thinking through the process with you. Hopefully someone else can correct my thoughts in another response.

    If the client has the ability to full pay (which your client appears to have given the $45,000 in cash and equity in available in the properties) then they do not qualify for and OIC.

    This leaves two choices; 1) Regular installment agreement or 2) Streamlined installment agreement.
    Given their income and equity they will not qualify for a partial installment agreement.

    The regular installment agreement requires all of the work you are going through above but the streamlined doesn’t. I’m an unsure if the streamlined is for under 50,000 or 100,000 now. But if it’s under 50,000 then have her pay 16,500 reducing her debt to 49,500 so that she qualifies for the streamlined. No other work needed.

    I’d love to hear everyone else’s thoughts on this!

    Raymond Garnsey

    Thank you for your response, Christopher.

    I am going to recommend the new Streamline IA to her for the 84 months but have to check the CSEDS again.

    I believe according to the IRM the rental properties are not listed on the 433 because the income is included. If she agrees to the 84 month IA the 433 won’t be required. She claims she has no income and commissions are not coming but never mentions she has the rental income I come with about $804 a month which I think she will balk at.

    Where are you located? I am in Southbury CT.



    Starla Smith

    If the client is not being cooperative with providing the information you have requested, I would provide her with the approximate monthly payment amount for a streamlined IA. If she balks at that, I would tell her that I am unable to further help her unless she provides the information you have requested so that you can determine what the IRS will view as her reasonable collection potential.

    The way I look at it, if the client isn’t willing to cooperate and provide the documents I have requested, then they aren’t serious about getting help.


    Eric Green

    I agree with Starla. If they client refuses to cooperate there is a reason and I would avoid them like the plague. Offer to try and get the FTA and set up the streamlined. Otherwise wish them the best of luck and send them on their way.

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