In Uncategorized on 10/27/2015 at 21:54

Offers in compromise are a big hit on the midnight TV circuit. And the results are often less than what the pitchmen promise. “The average taxpayer is inundated daily with television and radio ads placed by national taxpayer assistance companies that brag of their ability to obtain ‘pennies on the dollar’ tax relief from the IRS. The IRS can reduce the negative impact that these companies have on both the taxpayer and the IRS by posting simple and easily available information on its website to educate the taxpayer in readily available collection options.” IRSAC Small Business/Self-Employed Subgroup Report, 3/16/15, Issue Four.

Yes, make it simple. But let the offeror know that with the rose comes a thorn. Even The Judge With a Heart, STJ Armen, must bring this truism home to Millicent Stewart, Docket No. 28216-14L, filed 10/27/15.

Millicent’s OIC gets accepted after she raises the ante. But IRS’ acceptance letter says they’ll file a NFTL until Millicent pays in full. And IRS does.

Millicent fires off a Form 12153, and files in bankruptcy.

Millicent’s underlying tax liabilities are nondischargeable, and she never raised liability when she had the chance. STJ Armen also notes Millicent’s spouse got innocency for one of the years at issue.

Millicent says she didn’t understand about the lien. She thought IRS would lien if she didn’t pay, and she did pay.

STJ Armen: “Petitioner argues that respondent did not explain what the offer entailed and that she understood the terms to mean that a lien would only be filed if she defaulted on the offer-in-compromise. Although it is regrettable that petitioner misunderstood the Form 656, she has not shown that the settlement officer abused his discretion or otherwise contravened the express terms of the offer-in- compromise that petitioner signed. Moreover, the terms on the Form 656 were necessary for petitioner’s offer to be accepted; indeed, if her offer had not included the terms, then the offer would not have been a valid [sic]. See Schropp v. Commissioner, T.C. Memo. 2010-71, aff’d per curiam, 405 Fed. Appx. 800 (4th Cir.2010),wherein this Court stated (at*9) that if the taxpayer’s offer-in- compromise ‘had not included the prescribed terms [regarding the Commissioner’s right to file a notice of Federal tax lien in order to protect the Government’s interest on a deferred payment offer], then it would not have been a valid OIC’ and that ‘a notice of lien may properly be filed while an OIC is under consideration or after it is accepted.’ See Baltic v. Commissioner, 129 T.C. 178, 180 n.4 (2007); Taggart v. Commissioner, T.C. Memo. 2013-113, at *6; see also Green v. Commissioner, T.C. Memo. 2014-180.” Order, at p. 6.

Takeaway– How many of these TV gurus tell their customers the whole story? Practitioner, make sure that you do.

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