CTRS Offer in Compromise Flashcards

Which IRS forms are required to submit a Doubt as to Collectibility OIC for an individual taxpayer?

Answer: Form 656 and Form 433-A (OIC)

An individual DATC OIC requires Form 656 (Offer in Compromise) and Form 433-A (OIC) (Collection Information Statement for Wage Earners and Self-Employed Individuals).

What does the term 'dissipated assets' mean in the context of an OIC investigation?

Answer: Assets the taxpayer transferred or spent for less than fair market value, which the IRS may add back to RCP

Dissipated assets are those transferred away or consumed by the taxpayer below fair market value; the IRS adds their value back to RCP when evaluating an OIC.

During the pendency of an OIC investigation, what happens to the Collection Statute Expiration Date (CSED)?

Answer: The CSED is tolled (suspended) for the period the OIC is pending plus 30 days

While an OIC is pending and for 30 days after its rejection, the CSED is tolled under IRC §6331(i), preserving the IRS's collection window.

What is an Effective Tax Administration (ETA) OIC and when is it appropriate?

Answer: An OIC where the taxpayer can pay the full liability but collection would create economic hardship or be inequitable

An ETA offer is appropriate when the taxpayer has the ability to pay the full liability but doing so would either create economic hardship or be inequitable and not in the best interest of the government.

What is the OIC 'Pre-Qualifier Tool' published by the IRS?

Answer: An online tool on the IRS website that helps determine if a taxpayer is likely to qualify for an OIC based on income, expenses, and assets

The IRS OIC Pre-Qualifier Tool is a free online resource that allows taxpayers and practitioners to input financial data and see whether an OIC is likely to be a viable option.

If the IRS rejects an OIC, what is the taxpayer's next administrative option?

Answer: File an appeal with the IRS Office of Appeals within 30 days of the rejection letter

A rejected OIC may be appealed to the IRS Office of Appeals within 30 days of the rejection letter, giving the taxpayer another opportunity to present their case.