The primary focus of my firm is tax representation in Parkchester, NY. When taxpayers are seeking a tax debt resolution, they often think of asking for an Offer-in-Compromise or OIC. An OIC is one form of debt repayment that appears to be the most popular. Whether the taxpayer is eligible for an OIC depends largely on their ability to repay the tax debt. The IRS relies on the Reasonable Collection Process (RCP) to determine a taxpayer’s ability to repay tax debt because it involves the taxpayer’s gross income less qualified household expenses and the net equity in assets. The RCP formula has to be correct otherwise the taxpayer would have the offer rejected which could be costly.
The IRS takes into account local and national standards when determining household expenses that taxpayers could include as well as its respective limits in calculating the net household income. Expenses can be actual or allowable expenses depending on the type of expense. As well, car payments, student loan payments, or any other qualified monthly loan payments could be deducted assuming the taxpayer had been making those regular monthly payments for at least three consecutive months otherwise the deduction wouldn’t be allowed. The IRS could take up to year in deciding whether the taxpayer qualifies for an OIC based on the submitted RCP and supporting documents including insurance, retirement and investment related. If the taxpayers’ income increases or decreases during this time, then it could have an impact on the taxpayer’s ability to repay scheduled payments assuming the Offer is accepted.
If you or anyone you know who may be considering an Offer-in-Compromise (OIC), please feel free to contact me at (917) 708-1097 or via email at millertax.ea@gmail.com.
Miller Tax & Advisory Services
P.O. Box 967
Parkchester, NY 10462
Ph. (917) 708-1097
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