As I mentioned in previously blog entries the IRS announced dramatic changes to the Offer in Compromise on May 23, 2012. The most significant change is reducing the multiplier from 48 to 12 when looking at the taxpayer’s disposal income. In other words, the IRS has signaled a willingness to potentially accept offers of 75% less under the new rules. For more clarification, see my earlier blog posts.
However, there are some other changes that have been made. While these changes are less significant, they still add up to making it easier to settle your debt with the IRS.
Cash in Bank Accounts: If the money in your bank account is used to pay for monthly allowable living expenses, you are now allowed to reduce the total value of the bank account by $1,000.00, if the bank account has more than $1,000.00 in it. You are also allowed to reduce your bank accounts by the amount of your allowable monthly living expenses.
Motor Vehicles, Airplanes and Boats: A taxpayer can now exclude $3,450.00 per car from the net equity valuation of vehicles owned by the taxpayer if it is used for work, the production of income and/or the welfare of the taxpayer’s family. You can use this new exclusion for up to two cars per household.
Professional Books and Tools for the Trade: The IRS has increased to $4,290.00 the allowed deduction for professional books and tools of trade. This applies only to taxpayers who have business assets.
Accounts Receivable Not Included: The value of accounts receivable and notes receivable is no longer included in a taxpayer’s available equity and assets (in other words, if you are in business, this further helps you to reduce the amount of your offer for your settlement amount).
Transportation Expenses: When a taxpayer owns a vehicle that is six years old or older and has mileage of 75,000.00 or more, additional operating expenses of $200.00 or more per vehicle are allowed.
State Payments: If a taxpayer owes both delinquent federal and state taxes, but does not have the ability to pay those liabilities, the IRS will allow monthly payments to the state tax authorities under certain circumstances.
In Summary: The IRS has made many changes that help taxpayers settle their delinquent tax debts. If you want to settle your tax debt, seek out a professional who deals with the IRS every day.
Len Stauffenger has been recognized by the Publishers of the Columbus Dispatch in Cincinnati Inquirer as being among the top 5% of Attorneys in the State of Ohio for the last 9 years running. He limits his practice to helping taxpayers who owe the IRS delinquent taxes.
For a free consultation, call him at 1-877-349-8297.