Want to File an IRS Offer in Compromise? Fifth, the Offer Examiner and Acceptance or Rejection
July 13, 2017
Can I settle my tax debt for less that what I owe? (Part V)
This post is the fifth of five posts on filing an IRS Offer in Compromise.
For our fifth and final post regarding the IRS offer in compromise, we will discuss what to expect once you are contacted by your offer examiner through a recommendation for acceptance or rejection. We will not discuss post-rejection procedures such as Appeals or a Tax Court petition.
Offer Examiner Contact
IRS employees who handle offer in compromise applications are known as offer examiners. After filing the offer and diligently waiting, you will not know the offer examiner assigned your case until they make first contact with you. First contact will likely be a phone call and they will identify themselves accordingly.
While you have not reviewed the offer you submitted for many months, the offer examiner likely reviewed your file just before the phone call. Expect at least a few questions. Do not feel obligated to answer the questions immediately as you are well within your rights to request time to respond to any questions you cannot answer right away.
Most offer examiners will request updated financial information to see if any material changes have taken place from the time you filed the offer until now. This cuts both ways, however, as a material decrease in income will bolster your offer chances just like an increase in income may hinder your ability to compromise with the IRS. Even if the offer examiner does not request updated financial info, you can volunteer decreases in income or increases in allowable expenses.
Asset Tables, Income Table & Minimum Value Calculation
When the offer examiner feels they have all the documentation needed to make a decision, they will complete a financial analysis report. The report produces an Assets/Equity Table which will show the net equity in available assets. The report will also include an Income/Expense Table which shows your net monthly income. Please note that this is the first time you will able to compare the amounts you listed as income and expenses on your offer with the examiner’s findings.
The net equity in assets and a multiplier of the net monthly income combine to what is known as a minimum value calculation (“MVC”). If the MVC is at or below your offer amount, then your offer will be accepted. If the MVC is above your offer but below the total amount you owe, then the IRS Offer Examiner will want you to increase your offer to the MVC amount. Finally, if the MVC is more than your total liability, then the offer examiner will reject your offer stating you have the ability to full pay the amount owed.
Offer examiners have their own way of telling taxpayers whether they intend to accept or reject an offer. Some will fax the financial analysis report and MVC to a taxpayer and give them time to respond. Others will call you to review the report and MVC but not provide it ahead of time. You are entitled to review the financial report and MVC, so if an offer examiner tells you anything other than they are accepting your offer, request the report and MVC as well as time to respond. While this is not an entitlement, offer examiners will grant this request before making their final decision.