April 11, 2008, Newsletter Issue #58: IRS Case Studies in OIC

Tip of the Week

Aaron, a single attorney, owed the IRS $30,000 in income tax liabilities from the last five years.

He had $5,000 equity in his vehicle, while his miscellaneous assets totaled about $1,000. His current living expenses were more than his income.

Steve offered the IRS $6,000. The IRS declined his offer, and recommended an offer of $10,000. Steve agreed and increased his offer to that amount. It was accepted.

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Due to numerous business failings, Pam owed the IRS $500,000 in unpaid taxes.

Pam’s assets included e a fully paid Porsche, various investments totaling $8,000, and a house with a market value of $600,000 (with a $30,000 mortgage).

Pam proposed to settle for $90,000 with $45,000 paid upon acceptance and the remaining paid over five years. The IRS declined this offer. Pam then amended her OIC to $125,000 in installments with $45,000 down payment. The IRS declined again stating that Pam had the assets to fulfill her tax liability. When Pam did not satisfy her tax obligation, the IRS seized her home, sold it, along with her assets to fulfill the tax obligation.

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