Did you know there’s no limit to the number of times you can submit an Offer In Compromise for consideration by the IRS? This fact can lead to some creative lawyering by your tax lawyer. Here’s how that might happen.
The Internal Revenue Manual at 220.127.116.11.1 provides examples of “hardship” and “equity” cases in almost laughingly obvious situations. But the IRS needs to provide more specific examples of hardship that more closely approximate what tax lawyers see over and over again among their clients: the unanticipated medical retirement, the disabling disease, the abandoned mother with four children, the destitute senior couple. These are all examples of people living in situations where a hardship discharge just might be accepted by the IRS. So go ahead and make such an offer, knowing that your right to make a subsequent offer more along common grounds (e.g. inability to pay) can still be used even if the hardship approach is denied. In fact, making the “inability to pay” offer can thereafter be enhanced by what you’ve learned in making the hardship offer. What I’m saying is that you’ve learned enough at this point of the offer process to indeed combine the two for a second tier of type of offers, part hardship and part inability to pay.
Thus the tax lawyer should–in every case that justifies such an approach–submit initial offer proposals containing smaller offer amounts based on equity or hardship, rather than the formula amounts found in “inability to pay,” clearly indicating the taxpayer’s position while making the taxpayer’s case.
Finally, don’t be afraid to file an appeal where necessary or even multiple appeals. That’s what the process is in place for, to be used by deserving taxpayers in trouble with their tax debt.