In this presentation, tax lawyer, Sam Brotman, discusses IRS appeals and offers in compromise in order to answer questions that taxpayers may have on the subject

1. BROTMAN LAW ON IRS
APPEALS AND OFFERS IN
COMPROMISE
By Sam Brotman, Tax Lawyer
Masters of Law in Taxation, Masters in Business Administration
www.sambrotman.com
https://plus.google.com/+SamBrotmanBrotmanVirtualLawOffice/

2. APPEALS

3. APPEALS
 Reasons for disagreeing must be based upon the tax laws
 Cannot appeal your case based on only moral, religious, political,
constitutional, conscientious, or similar grounds

4. APPEALS WITHIN THE IRS
Can appeal to your local Appeals Office
 Separate from and independent of the IRS office taking the action you
disagree with
Conferences are held in an informal manner
 By correspondence,
 By telephone, or
 At an in person meeting
Most differences are settled at this level
If an agreement is not reached, you may be
eligible to take your case to court

5. APPEALS TO THE COURTS
 If you cannot reach a settlement with IRS Appeals, you may be
entitled to take your case to:
 The United States Tax Court
 The United States Court of Federal Claims
 The United States District Court

6. APPEALS TO TAX COURT
 If you disagree with the IRS over:
 Income Tax, Estate Tax, Gift Tax, or Certain excise
taxes
 Available only if the IRS sends you a notice of
deficiency
 You must file a timely petition within 90 days or 150
days if addressed to you outside the United States
 If you file your petition on time, the court will
schedule your case for trial at a location convenient to
you
 Can hear case before tax is assessed and paid

7. APPEALS TO DISTRICT COURT & COURT
OF FEDERAL CLAIMS
Hear cases only after:
1) You have paid the tax in full, and
2) Filed a claim for a refund

8. OFFERS IN
COMPROMISE

9. What it is:
An agreement between a taxpayer and the IRS
that settles the taxpayer’s tax liabilities for
less than the full amount owed
Includes all tax, interest, and penalties due
To qualify:
Must be unable to pay your tax liability in full
OFFER IN COMPROMISE

10. To apply:
 Accurately complete a Form 656, the official compromise agreement.
This is signed under penalty of perjury.
 Accurately complete a Form 433-A and if needed a Form 433-B, the
collection information statements. These are also signed under penalty
of perjury.
 Submit forms with a $150 application fee and appropriate payment
(unless waived)
OFFER IN COMPROMISE

11. Possible waiver of fees:
 Waived if income falls at or below certain published
levels.
 Determined by the OIC Application Fee & Payment
Worksheet.
 Not required to pay application fee or the required
initial payments
 Complete Form 656-A, Income Certification for OIC
Application Fee and Payment
OFFER IN COMPROMISE

12. Fees are non-refundable:
Cannot be returned to the taxpayer, even if
the offer is rejected
However, the amount will be applied to the
taxpayer’s tax liability
OFFER IN COMPROMISE

13. Reasons the IRS might accept an OIC:
1) Doubt as to Liability
2) Doubt as to Collectability
3) Promote Effective Tax Administration
OFFER IN COMPROMISE

14. Doubt as to Liability:
Legitimate doubt exists that the taxpayer owes
part or all of the assessed tax liability
No application fee is required
OFFER IN COMPROMISE

15. Doubt as to Collectability:
Doubt exists that the taxpayer will ever be able
to pay the full amount of tax liability owed
Offer amount must equal or exceed your
reasonable collection potential (RCP)
 RCP = The net equity of your assets
 Plus potential future income,
 Less certain basic living expenses
OFFER IN COMPROMISE

16. Promote Effective Tax Administration:
No doubt that the tax is owed
An exceptional circumstance exists that would
allow the IRS to consider your offer
 Have to submit a written narrative explaining circumstances
OFFER IN COMPROMISE

17. Types of OIC payment terms:
1) Lump Sum Cash
2) Short Term Periodic Payment
3) Deferred Periodic Payment
OFFER IN COMPROMISE

18. Lump Sum Cash:
 Offer amount must be paid in five or fewer monthly
installments
 20% of the total amount of the offer must be
submitted with the offer
OFFER IN COMPROMISE

19. Short Term Periodic Payment:
 Offer amount paid within 24 months
 First payment must be submitted with the offer
 Must continue to make regular payments during
offer investigation
OFFER IN COMPROMISE

20. Deferred Periodic Payment:
 Amount paid over the remaining statutory period for
collecting the tax
 First payment must be submitted with the offer
 Must continue to make regular payments during
offer investigation, or your offer will be withdrawn
OFFER IN COMPROMISE

21. OFFER IN COMPROMISE
Notice of Federal Tax Lien
 The IRS may file a Notice of Federal Tax Lien with any
of the previously discussed payment options.
 This is a legal claim to your property as security for
your tax debt. It is released when you satisfy the terms
of your OIC.

22. If Your OIC is Accepted:
 You Must;
 Timely file and timely pay all tax for five years (Five year
compliance)
 Abide by all terms and conditions of OIC
 If you subsequently default, the IRS can reinstate the
full tax amount owed plus penalties and interest
OFFER IN COMPROMISE

23. If Your OIC is Rejected:
 You will be notified by mail
 The letter will have reasons and how to appeal
 You may appeal the decision to IRS Office of Appeals
within 30 days from date of the letter
OFFER IN COMPROMISE

24. Collections Suspended:
 During the consideration and evaluation of the offer
 For 30 days after the offer is rejected
 During appeal of an offer rejection
OFFER IN COMPROMISE

25. Approved Installment Agreement:
 If you submit a periodic payment offer, you do not
need to continue making installment payments
during investigation
 Do need to make the OIC periodic payments
OFFER IN COMPROMISE

26. THANK YOU FOR VIEWING OUR
PRESENTATION ON IRS AUDITS AND IRS
OFFERS IN COMPROMISE
FOR QUESTIONS PLEASE CALL TAX LAWYER,
SAMUEL BROTMAN AT (619) 378-3138