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OT IRS offer In compromise.

So I am a tax preparer and handle a few of these. I've been working with a client that truly deserved a huge break. The IRS called me today and accepted our offer of $1,725.00 on back taxes penalties and interest of $38,999.07. I'm drinking bourbon tonight!
XL BGE
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Comments

  • SmokeyPittSmokeyPitt Posts: 5,122
    Wow...can I call you if I ever need your services???  I think your client should be buying the bourbon ;)


    Which came first the chicken or the egg?  I egged the chicken and then I ate his leg wing. 
    2014 Wing King's Apprentice
  • Great job! we need more like you and these stories.
    Hendersonville, TN.
  • EggcelsiorEggcelsior Posts: 9,759
    Damn. What was the initial penalty?
  • Seanr7Seanr7 Posts: 207
    The $38k was everything. Don't recall the penalty amount.
    XL BGE
  • EggcelsiorEggcelsior Posts: 9,759
    Oops, I misread. I thought it was $1725 for the penalty and 38k in interest. Derp. I'm with smokey.
  • KennyLeeKennyLee Posts: 602
    edited October 2013

    @Seanr7 Way to go!!  Any chance you would share the details?   I went through something similar a few years back.  The amount was minimal, but the "add-ons," i.e., penalties and interest would make the mafia blush.  I came out on top, but had to spend a fortune and hire a tax attorney to do it.  I got to see firsthand how those thugs operate.  Sad thing is if they'd have asked for the piddly amount they wanted sans the extras, I'd have probably just given it to them.  But as things turned out, they got less than that and we both spent a boatload (time, angst, manpower and dollars) coming to that agreement.

    Sorry for the rant......glad you whipped their a$$.

    LBGE

    Cedar table w/granite top

    Ceramic Grillworks two-tier swing rack

    Perpetual cooler of ice-cold beer

  • BotchBotch Posts: 2,736
    I had a similar experience, direct with the IRS, albeit on a much smaller scale.  I told them the truth, told them I couldn't prove anything, and that I did owe $xxx in taxes and interest.  They agreed, and I was pretty happy.  I won't bad-mouth the IRS.  
    _____________________________________________
     
    Live fast, die young, and leave a well-marbled corpse.  
     
    Ogden, Utard.  
  • Seanr7Seanr7 Posts: 207
    @KennyLee. I'd love to say its because I'm awesome. However the truth was I had a client that had massive documented "special circumstances" and an IRS agent with common sense and a heart. I will probably never get one like this again, although I said the same thing last year. I got the IRS to accept less then $2k on a tax bill of $93k.
    XL BGE
  • I am certainly no fan of the IRS or our progressive tax structure, but as one of the minority of income taxpayers I am not sure how fabulous it is to hear stories of people getting out of taxes they owe simply because they don't want to pay them or have "special circumstances." The special circumstances that the rest of us live under are laws.
  • Seanr7Seanr7 Posts: 207
    edited October 2013
    @jeroldharter, let's just say her special circumstances where mind blowingly terrible. It had to do with a child she adopted that ended up being very special needs. The child had been beating, raped, abused in ways you or I could never imagine. I read the DHS report and the doctors and the treatment schedule. It's amazing this little girl is semi functioning. And if I have to pick between the IRS forgiving a debt or a mother sacrificing all they have for a little girl that most in society would have written off I'll take the mom. Now bet your glad you wrote what you did because I guarantee you, her "social circumstances" make yours look like kindergarten playtime.
    XL BGE
  • EggcelsiorEggcelsior Posts: 9,759
    Seanr7 said:

    @jeroldharter, let's just say her special circumstances where mind blowingly terrible. It had to do with a child she adopted that ended up being very special needs. The child had been beating, raped, abused in ways you or I could never imagine. I read the DHS report and the doctors and the treatment schedule. It's amazing this little girl is semi functioning. And if I have to pick between the IRsSforgiving a debt or a mother sacrificing all they have for a little girl that most in society would have written off I'll take the mom. Now bet your glad you wrote what you did because I guarantee you, her "social circumstances" make yours look like kindergarten playtime.

    Good on you. Ignorance is bliss for some.
  • Sounds like an awful story but I am not sure how one's story is connected to a ~$40,000 tax liability. 

    I suspect that your client paid other bills (perhaps yours?) during that year without hiring someone to plead special circumstances. With a tax liability of $40,000 (ignoring the unspecified proportion that included penalty and interest) the  implication is that she must have paid some additional taxes along the way, perhaps sales, property, excise, state income, etc. So her AGI would be above average. I could see the IRS giving a break on penalties and taxes because those are usurious in the first place. But the IRS is not a charitable organization.

    Assuming just a $20,000 federal tax bill, a single person would need ~$102,000 in AGI assuming a standard deduction. Given extra deductions for possible medical expenses, additional deductions for adoption, child exemptions, etc. a single parent would need to generate a lot of income for just $20,000 in federal tax. A married couple would need ~$125,000 AGI. 
  • Seanr7Seanr7 Posts: 207

    You have zero clue, this was taxes from 2005-2012.  Did she owe them? Sure does she have the ability to pay them? No.  The IRS is very selective in accepting OIC, they carve out "Special Circumstance" because bad stuff happens.  I would rather the IRS make special allownaces for people like this, who are better spending their money helping out a child that frankly, neither you nor I would probably take in and care for!

    Her AGI is 32% of your assumed number!  But lets not let facts get in the way of your assumptions!

    XL BGE
  • I'm all for someone like this getting a special allowance, but when I see/hear all these commercials of people paying pennies on the dollar, I too wonder why/how these people get the breaks they're getting when the majority of us are paying our taxes.  Perhaps you can shed a little light on this for me.

    Damascus, VA.  Friendliest town on the Appalachian Trail.

    LBGE Aug 2012, SBGE Feb 2014

  • Seanr7Seanr7 Posts: 207
    Most of them do not get breaks, and the IRS has shut many of those down and prosecuted the owners. 
    XL BGE
  • I don't have zero clue. I only have the clues that you provide. 

    Eight years of taxes? Might have paid to drag it out longer.  I remember when I received a notice from the IRS about an error resulting in owed taxes, I had ~7 days to respond.

    If the income is 32% of my assumption then your client had earned income of about a quarter million dollars over 8 years.
  • Seanr7Seanr7 Posts: 207

    Except she doesn't but again lets run with your assumptions because it is so much more interesting 

     

    XL BGE
  • SmokeyPittSmokeyPitt Posts: 5,122
    edited October 2013
    <edit...this one is better>
    image


    Which came first the chicken or the egg?  I egged the chicken and then I ate his leg wing. 
    2014 Wing King's Apprentice
  • dlk7dlk7 Posts: 983
    image
    10 foot pole.jpg
    400 x 302 - 119K

    Two XL BGEs - So Happy!!!!

    Waunakee, WI

  • RACRAC Posts: 1,284
    Let me get the popcorn going!

    Ricky

    Spring, TX

  • BayaradBayarad Posts: 281
    Just remember that "pennies on a dollar" can be 99 pennies! Good job Seanr7! In our profession any day going home feeling like you made a difference is a great day!
  • njlnjl Posts: 780
    Seanr7 said:

    You have zero clue, this was taxes from 2005-2012.  Did she owe them? Sure does she have the ability to pay them? No.  The IRS is very selective in accepting OIC, they carve out "Special Circumstance" because bad stuff happens.  I would rather the IRS make special allownaces for people like this, who are better spending their money helping out a child that frankly, neither you nor I would probably take in and care for!

    Her AGI is 32% of your assumed number!  But lets not let facts get in the way of your assumptions!

    So, she stopped paying/filing for 8 years, and because she's having a rough life with an adopted child, [nearly] all is forgiven?  OTOH, the IRS probably just figured she's low income, has nothing to take, no ability to pay, and the sensible thing was to just write her off.
  • SmokeyPittSmokeyPitt Posts: 5,122
    I'm pulling for the Cards. 


    Which came first the chicken or the egg?  I egged the chicken and then I ate his leg wing. 
    2014 Wing King's Apprentice
  • JRWhiteeJRWhitee Posts: 2,483
    The Cards are off to a rough start.
                                                                        
    _________________________________________________

    Large BGE 2006, Mini Max 2014 
    Founding Member of the Green Man Group cooking team.
    Johns Creek, Georgia




  • Seanr7Seanr7 Posts: 207
    @njl, pretty much. However the IRS looks forward not backward as to collectibility. Her entire adoption credit of $12,500 was impounded for 2010. She's now paying and will be monitored by the IRS for five years. One screw up and the OIC unwinds.
    XL BGE
  • YEMTreyYEMTrey Posts: 1,662
    edited October 2013
    Thanks for the compliments.  Sure I'll share the setup:

    Platesetter, legs up, with a drip pan.  Indirect for 90 minutes at 350 degrees.  Tented for half hour then sliced.


    <Back on track>
    XL BGE and Mini Max in Cincinnati, Ohio

  • I had no income and thus did not file one year. IRS determined the money from sale of primary residence was taxable income. It met the criteria of non taxable. IRS sent a letter saying either respond or send $165,000.00. (The entire amount from the sale was probably less than $165,000.00.)
    I responded by mail but even though I knew better, did not get a return receipt.
    I was spending the summer in Colorado as a volunteer with the National Park Service when I got the nasty letter.  I stood outside at a pay phone while the IRS employee said I did not respond. He finally told me I had thirty days to respond.
    I had no paper work with me and had to rely on the IRS to supply what they had.
    About two months later another employee answered my letter saying I was correct and was not required to file.,
    I wish the person who essentially called me a liar and the person who stuck my letter in a file and went to lunch, annual leave many coffee breaks all while being paid could be made to answer for the problems they cause citizens.
    At another time, I tried to get information and was given false information by an employee. Information even I could figure was wrong.
    Rant over butt goes on around 0700 Friday.
    Bob
  • Little StevenLittle Steven Posts: 26,682

    Sean,

    You don't do any work in Canada do you?

    [-O<

    Steve 

    Caledon, ON

     

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