CHANGES PROPOSED FOR OFFER IN COMPROMISE PROGRAM:

The Taxpayer Advocate Service is working with the IRS Small Business/Self-Employed Division to encourage taxpayers to file an offer in compromise in situations in which it doesn’t appear that they can pay an outstanding tax liability.

“The number of offers in compromise being submitted has declined, and we’re hoping to look at a way to reverse that and get more viable offers that are both a benefit for the IRS — because they’re going to get more money than they would probably collect if it were to continue throughout the 10-year collection statute — and less of a burden to the taxpayer,” Jeff Wilson of TAS said during a webinar hosted by the Center for Taxpayer Rights July 17.

Wilson said taxpayers with accepted OICs have much better subsequent compliance rates than those whose offers are rejected. “There is decent evidence that it gets the taxpayers in the habit of being compliant and that that compliance continues,” he added.

TAS’s pilot program with SB/SE is being tested with 2,500 taxpayers, and there is a control group of 5,000 taxpayers, Wilson said.

Taxpayers identified for the pilot program are those who defaulted on an installment agreement in fiscal 2021 or 2022 that has not been reinstated, are current on filing their recent income tax returns, and recently received the earned income tax credit, Wilson said. The IRS does not think the selected taxpayers typically own real estate, and it does not appear that their income exceeds their allowable expenses.