IRS Eases OIC Terms
The Internal Revenue Service has again expanded its "Fresh Start" initiative by offering more flexible terms to its Offer in Compromise program. According to the IRS, the changes will enable some taxpayers to cut the resolution of their tax problems to as little as two years from four to five years previously.
Among the changes is revising the calculation for the taxpayer's future income. The IRS will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. All offers must be paid within 24 months of the date the offer is accepted.The IRS also narrowed parameters and clarified when a dissipated asset will be included in the calculation of reasonable collection potential. Equity in income-producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses. Also adjusted were Allowable Living Expenses. The National Standard miscellaneous allowance has been expanded to include additional items, including credit card payments and bank fees and charges. Guidance has also been clarified to allow payments for students loans while payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.
