CTRS CTRS Offer in Compromise 3

Question 1

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

Accepted Answer

Monthly disposable income multiplied by 24

Answer

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.

Question 2

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

Accepted Answer

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

Answer

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.

Question 3

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

Accepted Answer

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

Answer

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.

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

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

Accepted Answer

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

Answer

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

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS CTRS Offer in Compromise 3