by Jay Freeborne , Enrolled Agent
August 24, 2012

I am doing this post in real-time. I am speaking to an individual who owes the IRS $12,000.00. He lives in the Southeast and is married. This debt was incurred for the 2011 tax year.

He made $125,000 last year. He is on track to make $70,000 this year. His wife earns about $350 month.

So let's crunch the numbers for tax resolution

INCOME

His gross income: $5833
His wife's income: $350

TOTAL INCOME: $6183

EXPENSES

National Standard $1731 - family of 5
Housing and Utilities $1800 - County - Mecklenburg
Car payment $376
Car payment $408
Transportation cost $500
Medical insurance $542
Out of pocket medical $300.00
Fed/State/Soc/Medicare withholding: $930
Student loan $576.00

TOTAL EXPENSES: $7163

This family has no assets besides their basic household goods. No 401k's, No IRAs. They rent and have no equity in a home.

As you can see this family is just making ends meet. They would meet the criteria for Currently Not Collectible - which means the IRS would NOT bother them for the debt at all. They also MIGHT qualify for an Offer in Compromise.

A tax resolution firm - whose name I haven't yet determined -- sold them an Offer in Compromise - where they would settle for about $700.00. They would charge them $2500.00 to do this for them.

I wouldn't eliminate Offer in Compromise from their options - even though are young and don't owe a whole lot to the IRS. Still, I determined that Washington Tax would represent them on their issue - at least get the case determined as uncollectible and maybe do an Offer in Compromise. Our fee is $1200.00 to do everything.

For 30 years, WATAX has been solving every kind of tax problem. Call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you.

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