Nine months ago we warned you that Congress was about to make the Offer program much more difficult for the average taxpayer. Unfortunately, that proposed legislation passed, the President signed the bill and today, that law went into effect. Now, almost every taxpayer submitting an Offer in Compromise is required to pay a non-refundable deposit equal to 20% of the Offer in Compromise amount. If the Offer is rejected, the IRS keeps the deposit and applies it to the tax debt.

Under this legislation, is there any reason whatsoever for the IRS to accept any Offer? Not much. eTaxes.com believes we'll still get our Offers accepted because we only submit good offers, but frankly, I'm not certain. Fortunately, we did learn today that National Taxpayer Advocate Nina Olson has proposed that this law be repealed, but the likelihood of that is very, very slim. IRS Commission Mark Everson wants to kill Offers entirely and this is a close as he can get to doing so. We'll have more on the practical effects of the new law in the coming weeks.

On January 20th, 2006, while attending an IRS Tax Practitioner Seminar with the California Society of Enrolled Agents, an IRS Offer in Compromise Group Manager based in Oakland told us that the IRS was making another drastic cut in the number of Revenue Officers working Offer cases. There will be just 153 Offer specialists nationwide, a massive drop of 86% from the high of 1,100 Offer specialists just a few years ago.

These Offer specialists will be headquartered in just three offices, one each in California, Texas and Florida. Since IRS Commissioner Mark Everson despises the Offer program and clearly wishes to do away with all Offers, this is not at all a surprise.

In October 2005, we told you that Congress was close to making to the Offer in Compromise program much more difficult for the average taxpayer. Fortunately, the provision of the bill which would have required a 20% down payment with any lump-sum Offer was killed.

We received email from the National Association of Enrolled Agents (NAEA) that the provision has been reborn and is "being considered for inclusion in either the budget reconciliation bill or as part of legislation to pay for hurricane relief, each of which is likely to be acted on in the near future".

According to NAEA President Frank Degen in a letter dated September 29 sent to Congressman Jim Ramstad, Chairman of the Oversight Subcommittee, "if enacted, the proposal would require a taxpayer either to remit a 20 percent down payment with any lump sum offer or to make regular payment of proposed OIC installment payments while IRS considers the offer. Should IRS reject any offer, the agency would retain any monies remitted under this requirement. While the proposal would repeal the $150 OIC user fee, reduce time IRS has to accept an offer from 24 to 12 months (starting in 2010) and create a task force to review the entire OIC program, enrolled agents believe these benefits would be far outweighed by the so-called "good faith" provisions of the proposal".

We strongly agree with Frank Degen and urge Congress to kill this bad proposed legislation. As Frank notes, "With IRS guaranteed monthly "good faith" payments, the provision may also actually have the affect of slowing, rather than speeding IRS' OIC processing".

There is absolutely no doubt whatsoever that if this is enacted into law, it WILL be the start of the death of the Offer in Compromise program. IRS Commissioner Mark Everson has shown he wants to kill the OIC program and this will, without any doubt whatsoever, be the start of that process.

We urge you to contact your House of Representatives member and Senator and urge them to kill this proposed legislation.

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Last updated 12/11/2007 03:59:00 PM

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JULY 16 2006 BREAKING NEWS IRS & Congress Conspire to Destroy the Offer in Compromise Program

JULY 16 2006 BREAKING NEWS
IRS & Congress Conspire to Destroy
the Offer in Compromise Program