As a Mississippi tax attorney, we routinely work with clients throughout Mississippi to resolve their IRS federal tax debt and their Mississippi Department of Revenue state tax debt through the offer-in-compromise program. Of course, the first questions is always, how much do I have to offer? Unfortunately, the reality is, it depends. Before determining an offer amount, we must calculate was is called the taxpayer’s Reasonable Collection Potential, or “RCP.” It is this RCP number that will dictate the taxpayers resulting Offer-in-Compromise settlement amount.
So what is the Reasonable Collection Potential?
Well, for our clients in Jackson, Mississippi, and throughout Mississippi, we start with the client’s financial situation to calculate their household RCP. The IRS and MS DOR calculate these number differently, but in both cases, it generally determined by combining the taxpayer’s assets and future income, less debt, and reasonable living expenses. For a successful Offer-in-Compromise with the IRS or DOR, the taxpayer and tax attorney need to pay particular attention to the reasonable living expenses and the manner in which those are reported and documented to the IRS and/or MS Department of Revenue.
Historically the IRS only accepts approximately 20% of the offer-in-compromises that are filed, but the historical acceptance rate increases dramatically when a tax professional or tax attorney is involved, which the national average hovers around a 90% acceptance rate. By understanding the requirements and rules, we can evaluate your Offer-in-Compromise against the IRS or State RCP formulas and also ensure that the proper documentation is submitted and communicated. Knowing the process and how the IRS will apply RCP can have tremendous results. Be sure to sit down with a Jackson, Mississippi tax attorney who specializes in IRS representation and in particular has experience in presenting Offers-in-Compromise to the IRS or Mississippi Department of Revenue.
If you have any questions regarding an Offer-in-Compromise in Jackson, Mississippi, or any other area throughout the State of Mississippi, then please do not hesitate to contact me at 601-957-9672 or find us online at www.DamiensLaw.com.
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