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KATHERINE

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Hi dear friends here,

I have a problem now.  A client owes a lot, so I started a OIC.  When I filled out 433A, the rent lease was not under his name, but he pays to his living together girl friend.  The Officer wants her tax return to calculate his share of house hold expenses.  Which we gave.   Then, the officer reduced the expenses we claimed because her income is higher, and they are living together.  But the office also included her income as monthly income.  In this situation, my client got hit twice, first the living expenses get reduced (and the girl friend's expenses was not included); second, the officer included her income (she has a job, he doesn't have a steady job).   They are not married, no common kids, and all financial are separated from each other.   I felt something is wrong here, but the officer refuse to provide IRC and IRM.  Because from IRM i read, only expenses could be reduced.

Any thoughts will be appreciated.

 

Thank you!

 

Kate

 

 

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Just before the officer makes the final ruling, ask to speak to the manager.   Raise your concerns.   Document the conversation and be ready to pull out the IRM at appeals if the manager will not over rule the officer.   

It would have been better if the taxpayer drew up a rental agreement with the girlfriend, things would have been much cleaner.   I don't know how the officer can include her income in his ability to pay.   Roommates don't have tax obligations to each other.   His income, and his legit out of pocket expenses or the national standards, should be the only factors the officer should be considering when assessing his ability to pay.

Just my humble opinion.

Tom
Sparks, NV

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This OIC Specialist is way off base.  The only time another person's income can be used is in the case of a liable spouse.  There is an exception for community property states.

"(A) In general. Where a taxpayer is offering to compromise a liability for which the taxpayer's spouse has no liability, the assets and income of the non-liable spouse will not be considered in determining the amount of an adequate offer."

from USC 26 CFR 301.7122-1 (c) (ii) (A)

Before the final report is issued, it has to be reviewed by a supervisor.  That person is sure to catch it, especially if you send a note to be included in the file.

Appeals is the last resort, but I don't think it will get that far.  Anyhow, appeals is always more generous than the lower echelons.

 

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dear Mr. Tom and Mr. Max, 

I am so glad to have your answer here.  The reject letter was signed by the supervisor followed by the agent's analysis (which clearly in the income section, included roommate income, which he stated as VERIFIED BY IRS at the proposed by the agent).  They want  me to sign to agree or not agree (if not, need to list details), then there is an option to appeal.   I did ask for the supervisor contact before, which the agent gave and I called.  She never returned my call, instead, she rushed the rejection letter to me.   The offer was started last year around October 2020, the agent contact me this year around June said the case was transfer to CA but he didnot get the documents yet.  After verify his identity, I  offered to send everything digitally to him.   He said bank statements were too old., I sent him most recent ones.  He accepted all the assets part, which was $19k.  but he didnot take the currently income projection, other than that, he took average of 2020 and 2019.   Besides that, he added roommate income as household, and I told him roommate is non liable and he didnot transfer any assets to him, instead, she is paying bills and get reimbursed from him.  Their bank and everything have no current transfers.  He said she is considered as household income and significant.   While, he didnot take any of her expense, but reduced his expenses.      so instead of use his negative income, he used her net of $1500 for 24 months and resulted the offer has to be more than $50k.  My original offer was $7k because out of $19k assets , there are $10k was not belong to him which i have proof.  

 

I think the supervisor signed the rejection, which means no need to talk with the agent nor her anymore.   I will fill out a not-agree with detail and start to find other ways , like appeal.  

 

Thank you so much for your help.  

 

God bless all of us good people.

 

Kate

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5 hours ago, KATHERINE said:

The reject letter was signed by the supervisor followed by the agent's analysis

They are both WAY off base and outside of procedure, for all the reasons stated (and probably more).  Appeal it, and quote the IRM at them.  

Sometimes it seems they reject perfectly good OICs just to say the case is closed - as in, off their own personal list of open cases.  Appeals generally has more of a clue as well as better authority to over-rule idiot decisions of lower-grade drones.  Document everything and make sure you never miss a deadline.

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9 hours ago, KATHERINE said:

   While, he didnot take any of her expense, but reduced his expenses.      so instead of use his negative income, he used her net of $1500 for 24 months and resulted the offer has to be more than $50k.  My original offer was $7k because out of $19k assets , there are $10k was not belong to him which i have proof.  

 

Are you saying you calculated his offer based on negative income?  It looks like it because there $9k in assets attributed to him, so that would be the minimum that could be offered.

Was proof of the assets presented with the offer?  That can be presented at appeals, but it better be airtight proof.

I suppose it is for financial reasons that you chose the 24 month option.  I never use 24 months because it doubles the offer.  I try to foresee all the problems that could be involved in a case before taking it for OIC.     If I see too many hurdles to jump over I go for CNC, or IA.    

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Thank you all friends listened my problem. 

 

I was thinking about the 12 months,  I am always lack of confidence, so I am afraid of lose the 20% down payment, and I knew he is broke because his 2020 business had loss and he was collection unemployment.    The officer accepted all my paper, but he added the living together girl-friend monthly income into the total income, then reduced claimed expenses due to shared expenses (the standard things).  The client had all together about $19K assets (the car, computer, cell phone, the bank account, etc).  I offered less because there were $10K in bank was a customer deposit just got, which he had to spend to buy material for a project.  Since he had access to that money, so I agreed and let them take it, but I did not agree on the income, because, she did not marry him, they do not have common kids, he had a kid from previous marriage, she had her own job and income , he never transfer money from his personal or business bank (the officer had almost 10 months bank statements for both business and personal to prove that).  How can he add her income, besides that, he even did not ask me how about her expenses?   I was shocked when I saw my offer get rejected like this.    

 

The officer is also very rough.  I asked him to show me the IRM or IRC which says the roommate's income will be consider available income in the offer, he told me : "go to the IRM".  I told him the IRS didnot say that (IRM only mentioned share expenses)  and request citation.   he did  not provide any, instead, he said: "you are wrong".  Even the rejection letter did not have any citation on the IRC or IRM.  I was confused, because any letter from IRS, it always comes with tax code, which is standard format.  

 

I am not very knowledgeable on this, but I just feel we were mistreated or bullied by the officer.  when I ask the supervisor, I called and left message, no one call back.  Then the rejection letter was sign by the supervisor.

My client was scared.  He was afraid they will come to lock his business bank and he will be doomed.  I told him I will appeal, and since the officer already examined my paper, and I have 30 days as the letter said, they should not lock down his bank, also, if appeal, I told him, they should not request more recent month documents, because it is appeal, they should look at the paper the original officer received and accepted already.  I am just going to ask appeal to remove her income away, so his available income will be below zero, so let them take the $19K.   I told him should not be worse because they wanted $50K.  I dont know whether my advice is correct on this, can the appeal officer start over the whole process, which will be a lot work.

 

Good thing is:  he gave me his work cell phone and work email.  He wanted to talk on the phone, but I didnt, so all these conversation was saved in email.  

 

I will work on appeal this weekend, and I will keep up with friends here.  

 

Thank you!

 

Kate

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There are a couple of things here.

1. The IRS is not entitled to the $10K deposit as it is for business operating expenses. However, if your clients is like many SE persons and comingles his personal and business deposits in one account, you should show how that money is being spent buying materials.  

2. The IRS can not levy your clients bank account while the offer is being considered and for an additional 30 days after the case is closed.   This is supposing that the IRS has already completed the CDP (Collection Due Process) by sending out a series of letters notifying the client of Intent to Levy.

BTW, the IRS does not "freeze" bank accounts, unless there is criminal activity involved.  When they do levy/garnish, the bank has to hold the money for 21 days before before forwarding it to the IRS.  During those 21 days it is possible to negotiate with the IRS to set up an installment agreement and sometimes even have some of the money returned.

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  • 5 months later...

Hi dear friends here, Happy New Year!

It had been lasting so long and finally I have the case results.    The appeal officer turned down the original OIC officer and his supervisor's decision.  The appeal officer did not use income factor because only his income is counted and it is less than his expenses (he had a lot late due bills) .  She took only the equity factor including his personal bank, stocks , car value and his business bank at the time of first filing of OIC.   She actually reduced the OIC because I gave her the current business and personal bank accounts which show less money in both accounts.    So we accepted and made a first payment (as condition of acceptance, we agreed to pay off in 6 installment).  

Thank you all who kindly helped me.

 

Thank you!

 

Kate  

 

 

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Thank you all for support!  I don't feel too much excitement because I cannot believe how misleading the first OIC officer and his supervisor were.  They caused all these non necessary burdens to  taxpayer and us for some thing obvious.   If they are posting frivolous position to us, are they supposed to show us how to interpret procedure more careful than us?   Thank you all!

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7 hours ago, KATHERINE said:

Thank you all for support!  I don't feel too much excitement because I cannot believe how misleading the first OIC officer and his supervisor were.  They caused all these non necessary burdens to  taxpayer and us for some thing obvious.   If they are posting frivolous position to us, are they supposed to show us how to interpret procedure more careful than us?   Thank you all!

One EA I knew who specialized in representation (I think she's retired now) used to put in all her offers for $1,000 to get them rejected fast.  She said there was never any real negotiation or knowledgeable IRS people on the cases until you got to appeals, so why not skip the first level as fast as possible and get to a proper settlement officer.

Not sure if that's really the case, and not sure I'd be comfortable trying that, but I can see the sense in it.

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