First - his taxes due. He owes about $400,000 to the IRS. His tax debts should nearly have expired. But he had 1. a Failed Offer in Compromise on his case and 2. A bankruptcy filing (that was withdrawn) on his case. Both of these activities extended the statute of limitations for his taxes to expire. Normally - most of his tax debt would be expiring in 2014. But these actions extended his expiration of the debt to the end of 2015.
Second - expiration date of tax. So essentially , this old client's debt will expire in about 24 months from January 2014.
Third - financial analysis. Client has about $32,000 left in an IRA and has monthly disposable income after using IRS standards of $2500.00.
Before 2012 - this Offer would have been a likely no-go - $2500.00 x 48 months is $120,000 - throw in the IRA and you have a $152,000.00 Offer (more or less minus reductions in IRA for taxes, etc.).
Fourth - the 12 month rule for disposable income. With the new "12 month rule," client's disposable income times 12 months is $30,000 throw in the IRA and you have $62,000 Offer - much more doable.
Finally - the expiration dates are a key litmus test to Offer success. The disposable income of $2500 also needs to be measured against when the debt will expire. If you can pay the debt off within the statute -- the Offer is a no-go. However in this case , $2500 times 24 months left -- most certainly will NOT pay the debt of $400,000. So...this guy's Offer is a go!
