Yearly Archives: 2017

Do you owe a substantial amount of taxes to the IRS? 
If so, you've likely looked into establishing a payment plan.

What if you are simply unable to pay your tax balance? 
In this case, you might consider requesting an offer in compromise, which is a last-resort option that allows you to settle your account for literally pennies on the dollar. The key to getting approved for an offer in compromise is understanding reasonable collection potential which the IRS uses to decide if your account qualifies for this option.

A Definition of Reasonable Collection Potential
A reasonable collection potential refers to the maximum amount that the IRS believes it can collect from you over time. Generally, the agency uses a simple formula to calculate this amount, which you can easily figure on your own. However, if you want your request for an offer in compromise to be approved, you should offer the IRS at least the same amount as your reasonable collection potential and preferably a little more. If the agency believes it can collect more from you than you are currently offering it has no reason to approve your request.

How to Calculate Your Reasonable Collection Potential
Reasonable collection potential includes two factors: the liquidation value of your assets and your extra monthly income over the next four or five years. To figure your assets' liquidation value, add up the total cash you have on hand and in bank accounts as well as the current value of any investments. You'll also have to include the current value of your real assets, including cars, homes and property. You can calculate this by multiplying the fair market value by 80 percent and then subtracting any outstanding loans against the value.

The final figure is your additional monthly income after your necessary living expenses are paid. Simply deduct your essential expenses from your income and then multiply the money that is left by either 12 or 24 to figure your disposable income.. Add up your total disposable income, your current cash and investments and the liquidation value of your assets to arrive at your reasonable collection potential.

If you've been considering requesting an offer in compromise from the IRS, you need to understand how to figure your reasonable collection potential. Calculating this number can help you decide how much to offer the IRS as a lump sum which increases the chances that your request will be granted.

Downside to Submitting an OIC

Source:

IRS criminal investigations have decreased over the past few years in the wake of a steady staffing decline, with the 2016 fiscal year seeing fewer cases involving identity theft, money laundering and other financial crimes, according to an agency report released Feb. 27, 2017.

The Internal Revenue Service announced in its IRS Criminal Investigation (CI) annual report IR-2017-47, reflecting the significant accomplishments and criminal enforcement actions taken in fiscal year 2016.

The agency’s criminal investigation branch initiated a total of 3,395 cases in 2016, down from 3,853 investigations it handled during the previous year, the Internal Revenue Service’s report said.

Pointing to “a clear trend” of staffing decline affecting the agency’s core mission tax work, the report noted that between 2011 and 2016, staffing levels for special agents and professional staff dropped by about 19 and 22 percent, respectively.

CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes in a manner to foster confidence in the tax system and compliance with the law. The 50-page report summarizes a wide variety of IRS CI activity throughout the fiscal year and includes case examples on a range of tax crimes, money laundering, public corruption, terrorist financing and narcotics trafficking financial crimes.

Annual Report: https://www.irs.gov/pub/foia/ig/ci/2016_annual_report_02092017.pdf

Have a Criminal Tax Problem? 

 

 

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

for a FREE Tax Consultation

at www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).