When the IRS is looking a the Offer In Compromise regarding the applicant's property situation there are three main sets of circumstances because it all depends on the state where they reside, as well as how the title is set up.
When it comes to a state that has Community Property (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), also which Alaska is an opt-in community property state, it’s considered separate unless both parties agree through an agreement or trust in the 50 United States. This is important because the Offer In Compromise application will be asking you to list this information, especially if you and your spouse are on the title. This DOES NOT necessarily affect siblings or non-related individuals; however, it will need to still be listed and you will need to inform all those on the title about your Offer In Compromise application because the IRS will need to take those assets into consideration.
If you have property that was acquired before marriage and you are seeking to avoid being part of the IRS Offer In Compromise as possibly an injured spouse, because it was gifted, inherited, in a separate state, etc. You need to be aware that approval for your injured spouse relief would need to be approved BEFORE you cannot be part of the Offer In Compromise application process.
In the event of property owned through businesses or those who are non-related to the applicant such as family members, there may be a requirement by the IRS to sell those property assets to satisfy the tax debt as part of the Offer In Compromise negotiation process. The entire purpose of the Offer In Compromise program is to show that a debt is considered uncollectible, however if the IRS defines assets that can satisfy the financial obligation, they will expect the taxpayer to sell those assets for Fair Market Value with the proceeds directly applied to it with documentation submitted.
Hiding Is Not An Option
The IRS developed the Offer In Compromise program was introduced to help those who cannot manage their tax debt and it would be considered a hardship to be in so much debt. However, the program has helped thousands get a fresh start. This is why it’s important to contact a tax resolution associate with Bookkeeping-Results, LLC if you’re interested in learning if you’re eligible for an Offer In Compromise to be accepted.
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