An Inside Look at How the IRS Evaluates Your Offer in Compromise

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I have written and spoke extensively on how to settle your tax debt with the IRS for less than you owe, a process known as Offer in Compromise. Let’s look at some of the nitty gritty specifics of how the IRS goes through this process and what they look at.

Remember, the IRS Specialist, who will be reviewing your case, will primarily focus on your “ability to pay.” This is why you have to submit all of your financial information. I know from experience that they do research on their own. They do research to try and verify the accuracy and honesty of what you are submitting to them, and they also do research, primarily using their computers, which are extensive to determine if you have any other assets or income that you have not told them about.

I think the easiest way to give you insight into what really goes on is to give you real examples of cases that I have settled. The names are made up to protect my client’s confidentiality, but the facts are all real.

I recently represented Mr. and Mrs. “I wish I had of done this sooner” and settle their case with the IRS. We submitted all of the paperwork, all of the financial information and the first call I got from the Offer Specialist at the IRS, was to ask me about these six different pieces of real estate that my clients owned in six different states that we had not disclosed. Obviously, I knew nothing about any of the properties, because my clients had not disclosed them to me. Fortunately, with the addresses we were able to track them down and determine that my clients, had in fact, never owned five of them. Someone with a similar name had owned those properties, so those five were irrelevant. The sixth property, had in fact, been owned by my clients, but they had sold it for what they owed on it six months earlier. Once we cleared it up, it was smooth sailing to settle their case with IRS. Obviously, that tells you that IRS Specialists has the ability to search public real estate records throughout the country.

In another case, my client, who is a young lady, who lived in Texas and owned her own business, we were able to settle her tax debt for an amount that made her very happy, but not until we had gone through some uncomfortable moments. The IRS Specialist insisted that she had an ownership interest in two different partnerships and a Limited Liability Company. None of which were in Texas. My client claims she knew nothing about these other businesses and I believed her. Through our own record search, we were able to determine that she in fact, did not own any interest in any of those businesses, it just so happened that there were other women with exactly the same name as hers. Once we cleared it up, everything fell through and she was able to get the IRS out of her life. But this tells you that they search records pertaining not only to real estate, but filing with the various Secretaries Of State in all of the states in the US.

I have had other cases where the IRS has reviewed divorce records, probate records, and court house records relating to lawsuits that my clients were involved in.

I’ve also had many clients ask me about money or assets they might come into through inheritance. If it is just something that might happen in the future, the IRS has no way of knowing about that. Even if there is already a Will in place, unless that Will has been filed with the court house (a custom that is almost never done) the IRS has no way of knowing what’s in a Will, and they don’t really look too seriously at things that might happen. However, if you are in the middle of a probate case, it has already been filed, and you are expecting to eventually receive an inheritance through that probate matter that is “discoverable” by the IRS.

If you got an IRS tax problem, act now. Find an experienced professional who can tell you your options. The worst thing you can do is fumble around in the dark.

Len Stauffenger has been helping taxpayers solve their IRS problems for years. His practice is Nationwide and he has been recognized 8 years in a row as being among the top 5% of Attorneys. Call for a free consultation at 1-877-349-8297