January 26, 2010 by Jay Freeborne

A client of our's in Brooklyn, NY owes $500,000. He made superb money in 2007 and 2008, like a lot of people did.  Superb, as in, $400,000 a year. These are not the kind of numbers which translate into a client qualifying for an Offer in Compromise.  HOWEVER...

the client hardly earned anything in 2009 ($40,000.00). Those are the kind of numbers necessary to qualify for an Offer.  FURTHERMORE, AND FINALLY, his business is turning around, as he earned a commission of $150,000 already this year!!!!

How does one handle a situation like this? Hmm.

If we prepared a financial statement which showed only '09 income -- that would certainly be favorable to the client. However, it is likely we will average '08, '09 and '10 income and base the Offer in Compromise on those numbers.

As the above calculation will still show a very high income, our best bet is looking to be some kind of payment plan. 2008 numbers are just too powerful to be overlooked by the IRS. If his business continues to tank in 2010 (the last commission excepting), perhaps he may qualify for an Offer. We will revisit it then.

In 2012 - the IRS made their most dramatic revisions to the Offer program - radical changes -- Radical Changes to IRS Offer Program

If you want an HONEST AND INEXPENSIVE solution to your tax problem please call me or my staff at Washington Tax Services:  you can call us at 1-888-282-4697, or email me us a snippet of your tax concerns HERE and we'll contact you.  

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