Offers in Compromise (OICs)

IRS Tax Law 2012 Update

In a shocking development, in 2012 the IRS dramatically improved the Offer in Compromise program for challenged taxpayers. 

An Offer in Compromise is an application to the IRS on behalf of troubled taxpayer who owes a substantial tax debt and has little or no hope of repaying it over their lifetime. Finally recognizing that these are challenging times and that the Offer program is not helping enough taxpayers, the IRS has improved the program dramatically. The Offer program has complicated formulas between a taxpayer’s assets and their monthly income, ending up with a dollar amount offered to the IRS to satisfy a taxpayer’s tax debt. The program can take up to two years to negotiate with the IRS. 

  • The IRS revised the calculation of the taxpayer’s future income, calculating it over 24 months instead of 60 months. This factor alone reduces the Offer numbers related to income to nearly half.
  • The updated program allows taxpayers to deduct some if not all of their student loan repayments and state tax repayments for purposes of the Offer.
  • OICs have typically included cash as an asset which has increased the amount required to be offered to the IRS. Now, taxpayers can have some cash in the bank not included in the Offer.
  • The updated program allows $3,450 per car to be excluded from the Offer. And they allow even more deductions for an old car with high mileage.
  • It no longer includes assets in a business to be included in an asset calculation. For many taxpayers, such as truck drivers, contractors, and other taxpayers with expensive business assets, this will reduce the amount of the Offer dramatically.

For a typical client, the tax debt ranges from $10,000 up, very often from $100,000 to $1.0 million. The Offer amounts to settle old taxes have been as low as $500 to the IRS. Typically, the offered amount is a fraction of the total tax debt resulting on the frequent comment about solving a tax problem for “pennies on the dollar.” The Law Office of Lori Silver has an excellent batting average doing Offers in Compromise, and this new law will only improve the results for taxpayers needing help. 

Lori Silver also handles other difficult tax problems for clients, such as IRS audits, uncollectible, and installment agreements. For more information,
READ MORE: Tax Controversy and Problems  Tax Problems, IRS Audits, Installment Agreements

Call for an appointment to discuss your specialized taxation needs.
(831) 375-3030

Lori Silver, Attorney for Tax Offers in Compromise, Monterey

Tax Problems Lawyer in Monterey serving Carmel, Pebble Beach, Pacific Grove, Salinas, California

Re: Tax Offer in Compromise 

From: (Name withheld)
“Lori helped me obtain a successful offer in compromise. Very pleased with the outcome. Lori is a joy to work with.” — (Name withheld)

Re: Tax Problems

From: R. Hobbs
“Lori Silver has done my taxes for the past 2 years. Lori was highly recommended to me as a person that could help me with my complicated tax problems. Not only has she done my tax returns and billed me fairly but she has helped me work with the IRS to satisfy my outstanding tax burden. Both she and her staff have gone the extra mile to help me resolve my tax problems. I cannot thank her enough for her expertise and the peace of mind that she has given me.” — R. Hobbs