Is it better to have a job before submitting an Offer In Compromise to the IRS?

Question

I have heard that the IRS will not even consider an OIC unless there is income currently being earned. Then again, is it better to show little or no income, since they base their offer on a portion/percentage of what you make?

Answer 1

OIC's are becoming fairly rare these days, largely because of the partial payment installment agreement the IRS now offers. That kind of agreement allows you to pay an amount based on a financial statement even if it won't full pay the account before the statute of limitations for collections runs out.

If the statement shows no ability to pay, then you will be placed in a deferred collection status. An OIC might be considered in such cases if the likelihood of ever paying the balance is slim due to age, health, or other considerations.

Oh, by the way--here's an interesting web site in response to another post here: http://www.quatlosers.com/bill_conklin.h...

Answer 2

If you are not working now, your previous income history will be what is considered.  In evaluating an offer, IRS is attempting to determine the "reasonable collection potential of the account."  (its jargon)  

This means looking at the long haul and ignoring the bumps in the road.

If you were my client, I would be considering your potential--be it good or bad--in determining if an offer was appropriate.  If you are not working now, your account could be reclassified as currently not collectible (with currently being the operative word) and put on the back burner until things improved.

Answer 3

$50,000.00     R  E  W  A  R  D

Is offered to anyone who can show me the following:

1. What statute makes me liable to pay an income tax.

2. How I can file an tax return without waiving my Fifth Amendment protected Rights.

My name is Bill Conklin and I have researched the Internal Revenue Code for twelve years. It is my opinion after extensive research that there is no statute that makes anyone liable for the income tax and that all individuals who file tax return waive their Fifth Amendment protected Rights. The I.R.S. refers to the income tax system as a “voluntary tax system” so they can continue to use the information proffered on 1040 Returns against individuals in criminal cases.

What does the I.R.S. say about me? Mr. Conklin “knows the I.R.S. and I.R.S. procedures inside and out.” (Quote of Russ Vialpando, Special Agent, Denver District Office.)

Write for a free information packet to:  



N.C.B.A.

P.O. Box 2255

Longmont, CO 80502

Answer 4

If you owe IRS and you are not employed, call IRS and let them know you are unemployed and asked you account to be placed in "currently not collectible".  Just don't ignore the IRS.

because you can't pay, if you can't pay they can't make you pay if you are unemployed, but let them know your situation.

Of course when you are placed currently not collectible status interest and penalties continue to accrue and every year you will be sent an annual statement with the balance due and your account will be re-evaluated.  

But don't lie to the IRS that you are unemployed, remember the wage info is reported to them.

Answer 5

Tell them you are unemployed but are actively seeking work and will notify them when you have an income to arrange payments from.

Answer 6

Under Subchapter N, Part 1, Section 681 of the US Tax Law, Domestic income, that is income not having to do with foreign markets, is not taxable. The only taxable income, BY LAW, is:

1) You are a US citizen earning income from outside the US.

2) You are a non-US citizen earning income from inside the US.

3) You are earning income from a US holding (ex. Puerto Rico).

All income earned inside the US by US citizens, BY LAW, is NOT TAXABLE.