IRS Offer in Compromise CPA discusses reducing back taxes through Form 656 and Form 433a

Form 656 CPAs know the IRS Offer in Compromise program is popular again after qualifications relaxed during the Recession. An IRS Offer in Compromise means the IRS accepts less than you what you owe in back taxes as payment in full. The OIC is just one back tax technique. From my experience with providing free consults, many potential clients want to go straight to the OIC. Here’s how an IRS Offer in Compromise approaches a back tax case in general.

How Does an IRS Offer in Compromise CPA approach solving your Back Tax case?

• I start with listening to your story. Why? It helps the client emotionally and often reveals legitimate factors on which to base a tax strategy. The IRS sometimes takes a person’s circumstances into account like being past 60 years old, folks with medical conditions etc.
• Most back tax CPAs automatically request more time to work your case. I’ve never had the IRS deny this request.
• Next I look at the IRS version of your back tax situation. Usually that includes obtaining a Power of Attorney for you and pulling your back tax IRS transcripts.
• Next I look at the tax returns in question.
  • If you haven’t filed your back tax returns the IRS assumes you owe taxes on your entire income. Any back tax CPA will tell you filing a correct original return always decreases the IRS demand.
  • If you have filed all back tax returns, an Offer in Compromise CPA would first look to see if amending a return would cut your back tax liability.
• State taxes have to be factored into your back tax situation. I’ve seen folks forget about this crucial step.
• I look at all available avenues of attack like:
  • Filing or amending your back tax returns.
  • Putting your account into IRS “currently uncollectable” status. This buys time and may allow me to better position you for a future OIC.
  • Form 9465; an IRS Installment Agreement.
  • Offer in Compromise via IRS Form 656 or 656-L.
  • Asking for penalty abatement.
• If I think an OIC could work, I begin to collect the financial information required from the Client.
  • Typically a relative offers to pay the back taxes as reduced by the OIC.
  • The IRS may accept a payment plan with an accepted Offer in Compromise, so understanding your cash flow is vital.
  • All this culminates in preparing Form 656 or 656-L.

“I see the IRS Offer in Compromise program as one weapon in a back tax arsenal.”
- Gary Bode, Form 656 CPA and back tax accountant

What’s the IRS basis for accepting an Offer in Compromise?

Components include:

• “Realizable Value” of your assets the IRS could seize with a levy.
• Your future net income available to the IRS.
• An information Form like 433a.
• Extensive documentation.

Here experience helps, and using a CPA knowledgeable in the IRS Offer in Compromise is prudent. However I’m sure some Folks succeed on their own. Of course, CPAs aim low knowing the IRS will likely counter-offer.

Our free phone consult is a legitimate offer. The CPA license is national, so my virtual office can serve you wherever you live. I try to be helpful. I understand the call is a step in your due diligence with a back tax issue. It also helps establish whether I’m the right IRS Offer in Compromise CPA for you. (910) 399-2705.

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