More Problems with The New 433-A(OIC) and 656 Forms

The recently updated form 433-A(OIC) was released along with the new rules that allow many more taxpayers to qualify for an Offer in Compromise. This is good news for taxpayers and practitioners alike. However, a taxpayer attempting to complete an OIC on his own or a practitioner who is not fully aware of the problems with the form may offer to pay too much under the new rules.

The most obvious of these is the omission of exclusions for some (varying) amounts of cash and some equity in an automobile. If one completes  the forms 433-A(OIC) and 656 filling in the requested items, they will calculate an offer amount the fails to consider these exclusions because they are not included in the forms.

Seasoned practitioners would not submit offers without making appropriate adjustments, which they would detail on supporting schedules. We cannot expect the IRS to come back and tell the taxpayer that they offered to pay too much and that the Reasonable Collection Potential is less than the amount the have offered to pay.

The foregoing example considers a couple of simple and obvious problems with the forms, but it is only the small part of the problem with the forms. Issues like income producing assets, dissipated assets, or retirement of debt treatment are a few of the other areas that the experienced practitioner will consider, but that the nonprofessional or an inexperienced representative is likely to overlook.

Our upcoming Boot Camps and the West Coast Advanced seminars are fully updated to include these topics. Remember, past attendees of Boot Camps are able to return for a refresher at any time at half price.