Have a Tax Question? Ask a Tax Expert
Collection Financial Standards are used to help determine a taxpayer's ability to pay a delinquent tax liability. Allowable living expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer's (and his or her family's) health and welfare and/or production of income.
Below you will find the link to the IRS Publication on collections which will give you the full information on collections and your options for payment as well as your rights as a tax payer:
I sincerely XXXXX XXXXX information is helpful,
Sorry I timed out before I could finish my response.
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer's tax liabilities for less than the full amount owed. If the liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC.
The IRS may accept an OIC based on three grounds. First, acceptance is permitted if there is doubt as to liability. This ground is only met when genuine doubt exists that the IRS has correctly determined the amount owed.
Second, acceptance is permitted if there is doubt that the amount owed is collectible. This means that doubt exists that the taxpayer could ever pay the full amount owed. Third, acceptance is permitted based on effective tax administration. An offer may be accepted based on effective tax administration when there is no doubt that the liabilities have been correctly determined and no doubt that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
Hope this is helpful
Yes, you can file for the OIC yourself. Although the professional firm you spoke to does have more experience with these matters than you are probably used to.
IRS provides a package for filing an offer in compromise. The package includes the latest version of form 656, forms 433-A and 433-B. This package helps lessen the hassles of the complicated procedures of an application.
A worksheet for the calculation of offer amount is included in the package along with relevant information and instructions. Individual or self-employed taxpayers have to present a collection information statement in form 433-A.
You have to give a written narrative explaining your special state of affairs and why paying the tax in full would cause economic hardship for you and your family. It should quote the relevant public policies or equity considerations for the acceptance of the offer in compromise. Also, an income certification in form 656 has to be attached. All important financial documents required for the processing of the offer should accompany the application. It goes without saying that signature and date in the application are a must. An application fee of $150 has to be paid in the form of a check or money order. Some taxpayers are eligible for exemption of application fee.
It is MOST important that you check the forms for accuracy prior to filing since wrong or incomplete information could delay or nulify your request.
Best of luck,