Video instructions and help with filling out and completing Are Form 843 Publications

Instructions and Help about Are Form 843 Publications

One of the most sought-after resolution options for those who owe back taxes is the IRS offering compromise today I'm going to go through with you some of the eligibility requirements for the offer and discuss how the IRS goes about determining whether or not somebody qualifies for this program the first thing we want to talk about is what isn't offer and compromise an offering compromise is a program offered by the IRS that allows taxpayers to settle their tax step for less than they owe for eligible taxpayers this program can be a way to significantly reduce your tax debt and make it more affordable to pay and resolve any of your outstanding back taxes however one common misconception about the offering compromise is that people think that just because they Oh back taxes they qualify for a settlement however this is not the case not everyone qualifies for an offer and compromise there are many test circumstances and factors that go into determining whether or not a taxpayer that owes back taxes is going to be able to qualify for this program in 2012 the IRS rolled out their Fresh Start initiative through this program they expanded the offer and compromise making more taxpayers eligible and making it easier for taxpayers not only to qualify but to follow through with the payment terms of the offer and compromise so the first question that everybody wants to know is are they going to qualify for an offer and compromise there is a essentially a three-part prong test I would say for determining whether or not you're going to qualify the first thing that you're going to look at is the amount of taxes owed generally a taxpayer that owes more than $10,000 is going to qualify for this program however it's contrary to what you would think it's easier for somebody that owes more to get an offer and compromise than for somebody that owes less another thing that needs to be looked at is the amount of your monthly income - your monthly expenses the IRS is going to look at both the income coming in to your household along with all the expenses going out of your household to deter and whether or not you have an ability to pay on your back taxes the third thing that the IRS is going to look at is the equity in your assets they're going to look through what you own what you have and try to determine if you can use any of those assets to pay off your tax debt this type of analysis is going to be done for every taxpayer that tries to submit an offer and compromise we've had a lot of people that have come to us and said hey I owe tax debt call the IRS for me and offer from 20,000 to settle out my 200,000 in tax debt see what they say and unfortunately although that sounds simple that's not the way that the IRS works instead in order to go through the offer and compromise you're going to have to provide information not only on your monthly income and expenses but on all of your assets the IRS is going to take all this information and use it to perform a mathematical calculation to determine whether or not you qualify for the offer and compromise based upon the amount of taxes that you owe all right so now that we know what the IRS is looking for to determine if you qualify for an offer let's get into a little bit about how an offer is calculated so the first thing that the IRS calculates is called your reasonable collection potential or your RCP and basically what this is is this is an analysis of your monthly income to your monthly expenses so the IRS is going to want to know everything that you make everything that a spouse makes if you have a roommate if you have children that are receiving any type of income they're looking at the full amount of income that's coming into your household against that they will weigh your monthly expenses so again your full monthly expenses now the catch to this of course is the fact that the IRS has what are called IRS national standards so these are the amounts of the IRS states that they're going to allow for an expense so for instance your food clothing and miscellaneous expenses there's an account amount on that based on what the IRS believes your family size should be spending a month and that's it so if you're spending more than that amount they don't count it the same goes for a car payment housing expenses and also your automobile expenses so a lot of taxpayers will run into a situation where although their actual monthly expenses equal or exceed their monthly income the IRS allowable expenses don't the next thing that the IRS is going to look at is your equity in your assets so they're going to look at your house and let's say you have a hundred thousand dollar house and you've got fifty thousand owed on it the IRS is going to look and say hey there's some equity here that can be used to pay our taxes although they're not going to then take and require you to sell your house what they will do is take that amount of that equity and include it in the amount that your offers for they do allow some exemptions for instance they allow you'd have up to a thousand dollars in a bank account they allow an amount for your vehicle they allow an amount for income producing assets so there are some exemptions to the amount that they'll include in that equity but that number will then be used as part of the amount that you can pay towards your offer and compromise another thing that