Sent in OIC

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  • #35866
    Tammy Coalson
    Participant

    I have clients that we have filed an OIC for. The IRS has now sent a letter asking for proof of vehicles not listed as assets and a house that was foreclosed on in 2008. The clients have the information on the house, but the vehicles in question have been wrecked/totaled, repossessed or otherwise and clients do not have anything on these. And the vehicles are from 2003-2010. How do I advise the clients for this? The information being asked for is for really old information. And I have told them to get what they can together to bring to me. Anything else that needs to be done? Advise please. Thanks!

    #35873
    Eric Green
    Keymaster

    The Offer unit sometimes does this – comes up with random crap from ages ago. The foreclosed house is common.

    I would suggest first seeing if they can even get that information from the Dept of Motor Vehicles in some simple way, like online or with a phone call. If not, then perhaps an affidavit by them that those cars were wrecked/disposed of years ago and are no longer in their or another family members possession. Have them sign it at a bank in front of a notary. I would also get their auto insurance page that shows what cars they actually have insured. That should suffice. Finally, a printout from DMV of the cars they do have registered would help too, but as a last resort. I hate going to the DMV and will do anything to avoid it at all costs.

    #35914
    Tammy Coalson
    Participant

    Eric, I am a notary as well. But ethically, since I am the one preparing the OIC, can I do the notary as well or would that be a conflict of interest? Thanks!

    #36030
    Eric Green
    Keymaster

    Circular 230 states you should not act as a notary if you are their rep, so I would send them to a bank or another notary.

    #36806
    Tammy Coalson
    Participant

    We have sent in the notarized statement. Now IRS has contacted me and is asking for more information. The client and his wife, no dependents, live in a small rural community in TN. In 2018, Total SE income is $34,230 (2018 year) not minus expenses of $1,947 + HO of $900 (2018 year) and this does not include the quarterly estimated tax payments of $1600 and the retirement taken out, see later in this message. Total living expenses each month is $3,755 using the figures allowed & actually paid. They purchased a vehicle (13 Dodge Challenger) in January, 2018 that they are paying $500 per month on, but because they did not get rid of the old vehicles, a 93 Jeep purchased in April, 2017 with 200k miles, an 85 Dodge P/U they have had a long time and has a blown engine, an 08 Dodge Charger with 200k miles, they are saying that they won’t consider the money paid on the vehicle purchased in 2018 and they should have repaired the ones they already have instead. They cashed out a retirement account in 2018 from a W2 job that TP had left in 2015 in the amount of $12,845. When I asked them what they spent it on, they stated to catch up on bills, pay down payment on vehicle bought in 2018 ($4500) and help pay for their daughter’s wedding ($2500). The IRS is stating they have already allowed for expenses not including this retirement and consider this to be dissipated income and that TP & Spouse are double dipping. The IRS is now asking for a statement from 2 prior jobs with retirements accounts that are showing up that the balances on these retirement accounts are $0.

    What advice to say to IRS? I know the figures do not actually compute, but these people are poor, cannot afford to pay the $52,932.48 to IRS that goes from 2003-2017.

    #37016
    Eric Green
    Keymaster

    The need to get rid of the older vehicles – meaning donate them and give up the title. I would respond that the older vehicles are not driveable and are being donated, so the payment has to be allowed. The wedding is a dissipated asset and will need to be added back. I would also argue that they are uncollectable and it is in the government’s best interest to settle it.

    They wont, but try anyway. Then go to appeals.

    Eric

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