CTRS Offer in Compromise Flashcards

What is the 'Future Income' component of RCP for a periodic payment OIC?

Answer: Monthly disposable income multiplied by 24

For periodic payment offers (paid in more than 5 but no more than 24 months), future income is calculated as monthly disposable income multiplied by 24.

After an OIC is accepted, what is the taxpayer required to do for the next 5 years?

Answer: File all required tax returns and pay all taxes on time, or the offer may be defaulted

An accepted OIC includes a 5-year compliance period during which the taxpayer must file all returns and pay all taxes timely, or the IRS can default the offer and reinstate the original liability.

Which assets are generally excluded from the RCP calculation for OIC purposes?

Answer: Assets with no equity (fully encumbered by senior secured debt)

Assets with no equity because they are fully encumbered by secured debt senior to the federal tax lien have zero net realizable value and are excluded from RCP.

What is the IRS allowable expense system used when evaluating an OIC applicant's monthly disposable income?

Answer: National and local standards plus actual expenses for categories without a standard

The IRS uses National Standards (food, clothing, personal care, out-of-pocket health care) and Local Standards (housing, utilities, transportation) to determine allowable expenses, with actual expenses allowed for categories not covered by standards.

Can the IRS make the acceptance of an OIC public record?

Answer: Yes, accepted OICs are generally available for public inspection under IRC §6103(k)(1)

Under IRC §6103(k)(1), accepted OICs are public record and available for inspection, which is a consideration for high-profile taxpayers.

What is a 'processability review' in the OIC context?

Answer: The IRS's initial review to confirm the offer is complete, the required payment is included, and the taxpayer is in filing compliance before forwarding it for substantive review

A processability review is the IRS's threshold check to ensure the OIC package is complete, properly signed, includes required payments, and the taxpayer has filed all required returns.