Navigating the complexities of the Offer in Compromise process can be challenging for CPAs, tax professionals, and enrolled agents. When dealing with Offer in Compromise Special Circumstances, it becomes even more crucial to be well-versed in the nuances of this tax resolution tool. This article will provide a comprehensive guide to handling Offer in Compromise Special Circumstances, equipping you with the necessary knowledge and strategies to successfully assist your clients in achieving a favorable resolution with the IRS. By mastering these unique situations, you’ll be able to better serve your clients, build trust, and grow your tax resolution practice.
A Reminder: Good News for Taxpayers with Exceptional Circumstances
An OIC (offer in compromise) has been the life preserver of many a delinquent taxpayer over the years, but there’s also icing on the cake. The IRS has good news for taxpayers with circumstances that make payment difficult to impossible. You may remember it. It’s an OIC due to Exceptional Circumstances.
Owing the IRS is stressful enough, but for a disadvantaged taxpayer, the pressure of that delinquency can weigh even heavier. Disabled, chronically ill or taxpayers unable to enter a typical OIC may have reprieve.
What Does This Mean?
If after computing an offer amount your client doesn’t have the assets to pay the full amount due, there are options. The OIC due to Exceptional Circumstances helps them avoid economic hardship.
The IRS understands that life happens. Unplanned events or life circumstances such as serious or chronic illness can drive a wedge between assets and liabilities. In certain cases, paying the full amount – even when deeply reduced by an OIC – may impair taxpayers’ ability to provide for himself or herself or a family. There are times it would be impossible to manage the financial arrangements set forth by the IRS. The first step is to submit a narrative explaining your client’s circumstances.
Advise clients to provide documentation to support claims about their situation. If they can provide an adequate description, the offer might be accepted despite provision of a financial profile. Then attach those documents to an application and submit.
If there are no grounds for compromise under ordinary circumstances and exceptional circumstances are present, as long as compromise of liability doesn’t undermine compliance with tax laws, a compromise may be entered in to. (See 18.104.22.168 (02-28-2017) on the IRS website)
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