Offer in Compromise

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  • #42949
    Emmanuel Manalo
    Participant

    TP owes $36,000 for tax years 2017,2018 and additional $11,000 when he filed his 2019 recently.

    TP has been working as a welder under an independent contractor agreement with the Oil firm in West Texas since 2016. Since he works in an open oil field, he lives in an RV Van. He does not own a house or any asset other than his car which has already fully paid. His average gross monthly income is $10,000. TP’s wife and children are all in Mexico. His kids and his wife have valid social security numbers.

    Questions for calculating the RCP:

    1. Since he has no house and he only lives in an RV Van in the oil field, could he still claim the standard allowable for the Housing and Utilities?
    2. Could he include the life insurance, medical expenses, car, and car operating expenses of his wife in Mexico?

    #42950
    Eric Green
    Keymaster

    Emmanuel,

    Interesting case. He can certainly claim his own expenses, and I would try claiming his wife’s as well. Remember the 6 year rule: that he can claim all his actual expenses so long as he will full-pay the balance in 6 years. I suspect at $120K a month he will have enough left to pay in full within 6 years. It can be found at IRM 5.14.1.4.1.

    The big issue here is to get him to make his estimated payments, even if he has to do it monthly instead of quarterly, to stay current.

    Eric

    #42951
    Eric Green
    Keymaster

    Sorry, I meant $120K a year, not a month.

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