Today TaxMama® hears from Sallie in the TaxQuips Forum who is puzzled. “I am trying to prepare an offer in compromise. When I go through the computations in the updated Form 656 package, the offer amount equals more than the tax they owe! I’m missing something. Please help.”
What you’re saying is, that when you go through all the client’s assets, and their future earnings, they are worth more than the taxes they owe?
That means, according to IRS standards, they don’t qualify for the offer in compromise. It means they have enough assets and/or income coming in in the next few years to fully pay their taxes.
Instead, set them up on an installment agreement (IA). The IA doesn’t take assets into account, only current income and net cash flow. They may qualify for a low monthly installment payment based on their cash flow. Try that instead.
And remember, you can find answers to all kinds of questions about offers in compromise and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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