Hello, TRN. I am looking for a summary of the tax resolution financial guidelines for assets, liabilities, income and expenses that includes the differences between Offer in Compromise, Installment Agreement and Currently not Collectible.
Does anyone have something like this? Or do you have suggestions?
Gary, a simple Q, but not a simple A. CNC is basically where the taxpayer has no assets that can be liquidated to pay off the tax debt nor does the taxpayer have any income (after allowable IRS expenses) above that needed to pay his basis living expenses. If granted CNC, it is usually goof for 2 years at which time the IRS will reevaluate. As far as OIC and IA, a good starting point is to review Form 433 & Form 433-OIC to note the differences in the financial info requested by the IRS. When starting in this business, we had our work reviewed by an experienced tax resolution person to make sure that we knew what we were doing. You should also look into tax resolution software that will compute the OIC & IA offers. Good luck
Gary, to add onto what Bryan said, the rules are basically the same except as follows:
1. Offers – they exempt $1,000 of cash. For CNC I always argue (usually successfully) that you need to exempt for the TP one month worth of expenses in cash
2. For CNC, if the taxpayer cannot tap the equity in the assets then they can be CNC. For Offer purposes they do not care if it cannot be tapped or not – net equity is always included (unless it is a Effective Tax Administration Offer, which is extremely rare). So for CNC the taxpayer can try tapping the equity in their home and get three rejection letters and be deemed CNC. For an Offer the IRS doesn’t care, the equity must be included.
3. For Offers, they allow an extra $200 a month operating expenses for older vehicles (more than 6 years old or 70,000 miles). They do not allow this for CNC
That is all I can think of that is really different, otherwise the basic rules are the same.