March 26, 2008 by Jay Freeborne

The Offer in Compromise process usually involves a preliminary analysis by the IRS, in which they do a rough calculation of the financial statement and send the taxpayer an idea of what they accept...which usually amounts to a REJECTION!

We are finding that this REJECTION is usually based on two WRONG calculations: 1) the IRS multiplies the taxpayer's disposable income by 120 months; OR 2) they multiply it by the time left in the collection statute. This is WRONG, and seems to be an intentional deterrent to discourage people from seeking an Offer. The actual well-known calculation of disposable income is: 48 months! When our staff is preparing the appeals on these preliminary rejections, we make sure to remind the IRS of their own guidelines - and they appear to concede to them.

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