Attorney Adam Brewer recently helped his client settle a $22,000 IRS tax debt for $500 through the Internal Revenue Service's Offer In Compromise program.
Obligatory Disclaimer: Every tax case is different. The following case study is presented because we are proud of the result and it serves as an example of what is possible through an Offer In Compromise. There are a lot of misconceptions about resolving tax debt. If you have tax debt contact us for a free evaluation of your tax case.
Our client had income tax liability from 2016 of $22,o00. The income tax liability resulted from a retirement account distribution without enough tax withheld.
Our client only has enough self-employment income to cover necessary living expenses. In some instances, our client borrowed money from family members to cover monthly expenses.
Our client had few assets -- one vehicles, two bank accounts, personal effects, and work equipment. The value of these assets was considered by the IRS, but did not factor into the settlement amount.
The primary complicating factor was that our client was self-employed. This is a challenge when providing evidence of monthly income for Offer In Compromise purposes as well as maintaining current tax deposit compliance through estimated tax payments.
A second complicating factor was the retirement account distribution that caused the tax liability. It was necessary to explain to the IRS where the retirement funds had been spent as well as to explain why none of the money was left to pay the tax debt.
After submitting the Offer to the IRS’s Brookhaven Campus our clients’ case was assigned to an Offer Examiner in Brookhaven, New York. The offer examiner requested an updated profit and loss statement, an explanation on where the retirement account proceeds where spent, and bank statements.
After a review of the provided documents, the IRS agreed to accept $500 in exchange for discharging $22,000 in tax debt. The end result was a savings of $21,500 (97.7 percent discount).