Offers in Compromise -The Latest Strategies - Open Forum
March 13, 2001
Visit the AccountingWEB Workshop Calendar for upcoming sessions.
AccountingWEB is grateful to the team from Anson & Corley for providing information and fielding questions about the IRS's Offers in Compromise program. You can read the full transcript of the workshop.
August 28: The firm of Anson & Corley will present a workshop on topics related to negotiating with the IRS.
Randall Anson: Has anyone submitted offers on effective tax admin?
Mary Cardenas: 4 accepted--several pending. All clients were over 60 and had equity in farms, homes, or savings. The Internal Revenue Service did not demand full payment of tax or did not include equity of these items in the offer,
Session Moderator: Has anyone else had similar experiences with submitting offers to the IRS?
Edward Stankoski: if equity was not the basis, what was?
Mary Cardenas: Typically, small amounts of cash clients could borrow from relatives, etc. Client owning farm settled $4K in tax for $5000 offered.
Session Moderator: For those of you who are familiar with submitting offers in compromise - what type of taxpayer makes a good candidate for this procedure?
Randall Anson: We are a CPA firm. we have submitted offers over last 4 years for 4000 to several million in tax debt. Best candidate is a person with low assets and moderate or low income or special circumstances.Those in our firm pleas id yourselves. I guess my folks cannot read.
Session Moderator: What type of special circumstances.
Randall Anson: Mary, Tina, Rachel, Celesta, Bill, Clint etc Edgar.
Tina Anson: Tina Anson, Anson & Corley CPAs
Randall Anson: Mary take that will you. Special circumstances
Mary Cardenas: Special circumstances include: Advanced age, inability to work again because of age and severe health, all future assets and income will be needed to care for ill persons, etc.
Joe: looks like an office party. maybe we should skip the workshop and hold an office housekeeping meeting instead?
Randall Anson: or a very ill child
Session Moderator: a party atmosphere in the workshop is always nice! Thanks Mary and Randall
Randall Anson: Back to offers. don't know who is a practitioner or not but here is the deal. If you owe tax and cannot afford to pay it under some strict rules and some gray ones, you might get off for very little. Qualifying first is the tricky part. For example is anyone else using in lieu of bankruptcy strategies?
Session Moderator: Isn't it the case that taxes from the most recent three years can't be absolved in bankruptcy?
Randall Anson: true but the old ones can and if they are old and some new, a taxpayer with very high income and low assets can get off easily
Joe: I have a client with 700k/yr in income who owes 500k in taxes, but the money is tied up in real estate ventures.
Randall Anson: Net asset value?
Joe: approximately 1.5m
Randall Anson: he's going to pay
Joe: that was our conclusion.....
Randall Anson: mary and bill agree? Other CPAs
Tom Culmer: yes
Mary Cardenas: yes
Randall Anson: Example of in lieu of bankruptcy.
Edward Stankoski: what happened to the old rule of thumb to offer your "equity"?
Randall Anson: TP owes 1 million has 50k net assets at liquidation value. Earns 400000 year. Theoretically he could get off if 1040 and eligible for bankruptcy. Out the window Ed. Like a lot of things now, a good excuse is needed. Lowest offer accepted here is $232.
Jon Oberman: We are waiting for 12 to 18 months to hear about OIC's. Is this typical?
Randall Anson: Lowest % offer was .05%. Depends on area. AZ is worst right Mary? TX 3-6 mos.
Mary Cardenas: yes, most definitely.
Randall Anson: what is your state Jon
Jon Oberman: California
Randall Anson: our website has a composite list of times. www.irsoffer.com
Randall Anson: CA I think is about 12mos. You mean to hear if accepted or just to get investigation under way?
Mary Cardenas: Texas takes typically 6-9 months depending on amount owed
Randall Anson: How about our CA clients? Jon Southern or Northern?
Jon Oberman: Southern
Randall Anson: it's going to be slow. They should relocate to do an offer LOL. We also have electricity most days but a lot of outages
Jon Oberman: What's an LOL?
Randall Anson: new kind of offer - no just means laughing out loud.
Jon Oberman: Randall, for a CPA you are some kind of cutup.
Randall Anson: Thank you for you kind words. Cut Paste and Assemble. Car Park Attendant.
Tina Anson: he thinks he is very funny
Tom Culmer: Constant Pain in…
Tina Anson: our butts.
Randall Anson: That is why I get the big bucks'
Jon Oberman: Is the firewall fixed yet?
Randall Anson: no yucks. Anybody had to put up with personal visit by IRS yet to clients home? Any clients complain to IRS?
Jon Oberman: several times.
Randall Anson: Always thought that would be funny: Jon did you put up with the visits or try to stop them?
Jon Oberman: try to stop them
Randall Anson: Mary have we had any yet we could not stop?
Mary Cardenas: no
Randall Anson: How do you stop? I think the personal visit is a little overboard.
Jon Oberman: I agree.
Mary Cardenas: Call the RO personally, If that fails, then their manager. If that fails, TP Advocate or Chief of Collections.
Randall Anson: Tom, Jon, do you get your fees allowed on 433?
Jon Oberman: yes, but they always ask the full bill due.
Randall Anson: IRS Manual states that IRS employees are forbidden to insert personal values into decisions on OICs.
Randall Anson: Home visit I think violates that. Mary are we still winning all those on the fees?
Jon Oberman: interesting, thanks for the info.
Mary Cardenas: All.
Randall Anson: So our fees are always allowed by IRS. Cool very . Let's talk about problems in getting offers approved. Anybody? appeals?
Randall Anson: Mary have we had any rejections on the hundreds we sent in?
Jon Oberman: have had only one offer ever approved-client was over 60.
Mary Cardenas: Inflexible or untrained officers who cannot or will not follow the Internal Revenue Manual. For that, whip out their rulebook and remind them. Or talk to their group manager.
Randall Anson: How many are you doing Jon, give us a scenario. anybody else?
Jon Oberman: we've done 20 overall.
Randall Anson: lost 19?
Jon Oberman: yes, all converted to installment'
Randall Anson: all CA?
Jon Oberman: yes
Tom Culmer: Randall so glad you are talking just trying to get into it and that's why I'm here
Edward Stankoski: Randall, I'm a novice here, what the single best source of info to do an OIC
Tom Culmer: but Jon isn't very encouraging
Jon Oberman: thanks
Randall Anson: Do you qualify them up front or help qualify them up front like go get life ins or go get a new car, health ins. Our web site is good - www.irsoffer.com. A few books but they are out of date, yes we do but it doesn't seem to matter in so cal. We get offers accepted in S Cal all the time Mary talk to this boy. IRS be running over them out there. You know the IRS standards are no longer that fixed right? You can adjust them?Fees should always be allowed.
Mary Cardenas: Remember, the IRS has to follow the Internal Revenue Manual regardless of where they're located. So. California is no exception.
Jon Oberman: we have had problems in the past with values of vehicles.
Randall Anson: Never be afraid to challenge the specialist, they know less than you.
Randall Anson: 80% of blue book, if to o high get buy offers from car max.
Jon Oberman: good point!
Randall Anson: It is a lot of guts and bluffing guts on your part, bluffing on theirs.Never submit an offer that won't work!
New topic: IRS has to leave your client alone once you submit the offer, any problems with that?
Jon Oberman: have you ever been successful with a client who has a 401K? do you lose the 401K? Never.
Randall Anson: Mary new rules on that and they suck..Yes on 401k it is tricky.
Mary Cardenas: All you can do is offer the value of the 401K less income tax and 10% penalty to cash it, minus any outstanding loans
Session Moderator: Can I assume this rule applies to IRAs as well?
Jon Oberman: same experience I've had
Mary Cardenas: yes
Jon Oberman: Randall, great idea-thank you
Randall Anson: Jon we get our fee that way sometimes
Jon Oberman: where are you located?
Randall Anson: If you have not done offers before San Antonio TX, irsoffer.com. If not exp in offers very much, qualify carefully then do it. Save a lot of heartburn sometimes an offer is not the smart thing to do. Example: client has big taxes that will not bk. do a lifestyle inst agreement, don't sign one just pay it let the clock tick then bankrupt on them,private. If client can qualify for bankruptcy later never do anything to extend statute of limitations like chapter 13 or Offer in Compromise the clock is your friend. Tthe calendar is the other friend
Jon Oberman: what is lifestyle?
Tom Culmer: watch the hits on your website when this is over Randall.
David Watt: Did it end
Randall Anson: back volcano said I crashed. didn't feel a thing.
Randall Anson: anybody hurt.
Tina Anson: Ha ha, oh you are sooooo funny.
Randall Anson: we have definitely been wiretapped-half right Tina.
Tom Culmer: I can see she is a big help to you.
Tina Anson: what do you mean
Randall Anson: she is more help than I can handle
Tina Anson: I am the only one that gets away with abusing him.
Tom Culmer: you're a lucky guy.
Randall Anson: true
Randall Anson: questions?
Session Moderator: We're about finished with our scheduled time here - first, I can't thank Randall Anson, Mary Cardenas, and the other members of Anson & Corley enough for all of their help with this workshop. Next, what I will do is obtain from Bob Brennan a manuscript of the material he planned to offer today, and when the transcript of this workshop is posted, I will post a link to Bob Brennan's manuscript as well. Meanwhile, be sure to drop by Anson & Corley's web site at www.irsoffer.com to see what they have to offer, and also Bob Brennan's site, www.usataxrelief.com which is also linked in the banner above
Arlen Pecka: How come we are all here goofing off instead of doing taxes???
Tom Culmer: thanks
Session Moderator: Thank you all for joining us today and bearing with us in our problems!
Jon Oberman: Thanks - wish we could have had the seminar
Tom Culmer: so you will post the transcript in your newsletter
Session Moderator: We'll put a link to the transcript in the next newsletter
Tom Culmer: this was my first one and believe it or not I enjoyed it.