Can I Get an Offer in Compromise if I Don’t Have Any Income?
The Offer in Compromise Formula
Can I get an Offer in Compromise with no income, Susan from Florida asked? Yes, if you can prove to the IRS that you’ll be able to make all the required payments. The IRS is going to be asking the same question I asked Susan. So, how are you paying your bills? She said, I can pay my bills, there is just nothing left over after that. Then you may be a good candidate for an Offer in Compromise. What Susan meant to say is she does not have any discretionary income, not that she does not has any income.
The IRS uses a formula to determine the Reasonable Collection Potential. This formula consists of Income, Assets and Expenses. The IRS uses the formula:
Income PLUS equity in Assets MINUS allowable Expenses EQUALS offer amount.
Is this situation temporary?
This is the second question the IRS is going to want to know. Is this a temporary condition? If this is a permanent situation or for the foreseeable future, you still may be an Offer In Compromise candidate.
If it is temporary, an Offer in Compromise may not work
If you previously did the analysis and determined you were not an Offer in Compromise candidate, but now your temporary financial circumstances have changed, you are likely still not a candidate for an Offer in Compromise. If the IRS determines this situation is temporary, they will likely deny your Offer.
This is usually when people are between jobs or have a medical condition that prevents them from working. The IRS has a program for this. Currently not Collectible is a program for people that do not currently have the ability to pay as it was designed for financial circumstances that are temporary. After a period of time, or if the IRS notices your income based on your tax returns has increased, they will ask you to provide new financial information.
I have seen many people try to prepare their own OIC and fail because they do not fully understand the art of dealing with the IRS. Yes, you can submit an Offer in Compromise yourself, but if you are trying to considerably reduce your debt, I recommend you rethink your position.
Should you get help?
I have seen many people try to prepare their own OIC and fail because they do not fully understand the art of dealing with the IRS. Yes, you can submit an Offer in Compromise yourself but if you are trying to considerably reduce your debt, I recommend you rethink your position.
An “accepted” OIC is not the same as a “successful” OIC.
There is more to it. Sure, the average taxpayer can fill out the forms and after spending hours reading and rereading the instructions provide the substantiation needed for an application to be accepted. How do you measure success? To me, success is measured with an approval on the LOWEST DOLLAR AMOUNT the IRS will accept.
If you feel that you may be in over your head, or just want to get a second opinion, let’s set up a short call. To avoid the back and forth emails and phone tag, I have included a link to my Calendar https://calendly.com/taxman/tax-problem-resolution-initial-consultation. Let’s set up a 30 min. phone conference to get to know each other. The phone number to call is 855-829-5877 and my extension is 203.