Media


06/04/12


IRS Liberalizes Offers in Compromise Program

Related Attorney(s): David S. De JongMark W. SchweighoferEric J. RollingerDavid B. Torchinsky

Media Type: Alert

The Internal Revenue Service, on May 21, 2012, announced liberalized guidelines for Offers in Compromise designed to grant relief in hardship situations to more taxpayers and at a lesser cost.  Most significantly, IRS will process and normally approve Offers in excess of the sum of a taxpayer’s equity in assets plus either 12 or 24 months disposable income depending, respectively, upon whether the Offer will be paid following acceptance in five or fewer installments within 24 months or paid in more than five installments on a monthly basis within 24 months of the offer's submission.

The definition of “disposable income” will be narrowed as IRS will generally allow expenses for back state taxes and student loans as well as added operating expenses in the case of older vehicles. The definition of “equity in assets” will also be narrowed as IRS will generally disregard income producing assets, the first $3,450 of equity in one or two vehicles and cash on hand needed for allowable living expenses (minimum $1,000).

If you owe back federal taxes and have never sought an Offer in Compromise because of the prior guidelines or if you have been previously rejected, now may be the time for submitting an Offer.

Offers in Compromise are not for every business or every individual with back taxes.  Most particularly, those approaching the 10-year statute of limitations (in the absence of a timely suit by IRS subsequently reduced to judgment) on collection who are being left alone or who have installment agreements should usually not seek relief.  Applying for an Offer in Compromise suspends the running of the limitations period.

If you would like to meet with one of our tax attorneys to determine if an Offer is advisable for you or if you need assistance with any federal or state tax matter, please call 301-340-2020.

Tax Law at Stein Sperling

Stein Sperling’s tax law attorneys counsel clients on the intricacies of business and personal taxes in order to minimize tax liabilities. Each of our tax law attorneys holds either a Master of Laws degree in Taxation or is a Certified Public Accountant (CPA) or both. We participate in programs that allow us to stay on top of the rapidly changing world of tax laws, regulations, cases and rulings. We decode the tax talk and carefully guide our clients, helping them understand the big picture tax implications and tailoring strategies that benefit their short- and long-term objectives.


See All Media

Resource Center

Sperm Donor Agreements: Why You Need One Even When Using…

The purpose of a donor agreement is to clearly establish that donor is not the child's legal parent.


Read more - Sperm Donor Agreements: Why You Need One Even When Using…
Estate Planning FAQs: Maryland Probate

Letters of Administration? "Interested Persons"? Accounts? Learn about the Maryland Probate Process.


Read more - Estate Planning FAQs: Maryland Probate
Wage Laws in Maryland, D.C. and Virginia: Common Issues

Missteps, such as misclassification of employees and paying workers "salary," can lead to claims.


Read more - Wage Laws in Maryland, D.C. and Virginia: Common Issues
FAQs about Wage Laws in Maryland, D.C. and Virginia

The laws are complex and provide for significant penalties for any violations.


Read more - FAQs about Wage Laws in Maryland, D.C. and Virginia