1. It may take 7-21 days from the date the client signs a contract before the contracted work begins as it pertains to the services contracted for by the customer. During this time, though, work is being conducted for the client as the Power of Attorney (POA) is being filed with CAF (Centralized Authorization File) and the Master File is being requested. The client should begin gathering documentation that will be needed by the IRS as soon as possible.
2. Throughout the entire process, the client will still receive correspondence from the IRS via mail. The IRS is legally obligated to send the client bills, monthly statements, etc. Once the Power Of Attorney (POA) is on file, the client should not receive anymore phone calls from IRS.
3. The company name is not on the POA on file with the IRS because a company name cannot be on the POA. The POA has to have an individual’s name on it. Thus, the POA that is on file with CAF will have the name(s) of the authorized representative(s) working for the company.
4. If the client is in collections with the IRS, levy notices will be sent to the client. It is up to the client to let the company they are working with know about these notices. Collection/levy activity cannot be stopped. However, a Stay of Collections (SOC) or a temporary delay in the levy process can be requested so the file can be worked and an OIC, IA, etc., be completed and submitted to the IRS. If a levy is put in place, an attempt can be made to get the levy released. The final decision on a release of the levy is up to the IRS.
5. The IRS requires the most recent three months of financial documentation. It is often suggested to clients that they continue gathering this documentation on a monthly basis and send it to the company hired to prepare their case so the most current months are always on file. The figures from the financial documents need to be inserted into the correct IRS forms, which are submitted to the IRS with the client’s signature. The IRS may then ask for additional, updated documentation to continue.
6. The ultimate decision to accept or reject an Offer in Compromise, Installment Agreement or Currently Not Collectible Status rests with the IRS. The successful submission of any of the above is not a guarantee that it will be accepted.
7. The dollar amount for an OIC comes from monthly income and expense documentation supplied by the client. The allowable monthly expenses are subtracted from the monthly income to equal the Monthly Disposable Income (MDI). The MDI is multiplied by either 48, 60 or the number of months remaining in the statute to come up with Future Income Potential (FIP). Any money in bank accounts or retirement accounts, as well as equity in real estate, vehicles, etc., is added to get the OIC amount.
8. Not every bill is considered an allowable monthly expense by the IRS. The IRS will not accept bills for cable TV, the Internet or cell phones unless these are needed as a term of employment and are not reimbursed by the client’s employer. Medical bills without proof of payment will not be considered, nor will federal student loans for anyone other than the client, or charitable contributions unless it is needed as a term of employment.
9. The IRS retains the right to impose a monetary penalty for “frivolous submissions.” The penalty applies to frivolous claims made on tax returns, requests for a collection due process hearing, applications for an Installment Agreement or Offer in Compromise, and Applications for Taxpayer Assistance (ATAO’s/Form 911). The IRS recently increased the penalty from $500 to $5,000.
10. Once the IRS has the OIC, the customer and company preparing the case for the customer are on the IRS’ timeframe. The Offer Examiner (OE) may request additional or updated documentation. Once they have all of the documentation, they will send out a preliminary analysis, which states whether they are recommending the OIC for acceptance or rejection. The OE may also counter with a different dollar amount, depending on their analysis of the client’s financial situation. If it is recommended for rejection, the client can supply more financial documentation within 14 days to counter the rejection. If the Offer is rejected, the client may or may not have grounds for an appeal, depending on why the OIC was rejected. An appeal can take up to another 90 days. If the OIC was recommended for acceptance, it still has to have final approval. Additional updated documentation may be requested again. There really is no ETA as to when the IRS will have a final decision.