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OFFER IN COMPROMISE FUTURE INCOME CONTRIBUTION REQUIREMENT 

This article is the third in a series of four that may used as reference to complete the IRS offer in compromise forms. This article will provide specific instructions and information to calculate the amount of future income that must be included in your total offer amount.  

To accomplish this task you must compare two factors to determine the number of months that you must contribute your net income to settle your back tax debt, interest and late penalties.

First Factor: Options

Lump Sum Cash Payment Option:

Parameters: Total offer amount to be paid in 5 or fewer months and 20% of the total offer is to be remitted at time that you submit your offer to compromise.  Your First Factor: 48 months.

Short Term Periodic Payment Option:

Parameters: Total offer amount will be paid in more than 5 or more months with payment installments not to exceed 24 months. Your First Factor: 60 months.

Deferred Periodic Payment Option: 

Parameters: Total offer amount will be paid over the number of months remaining until the collection statute expires. Your First Factor: 0 months.

All options require your initial installment payment and payment schedule commencement with processability acceptance of your offer. If your offer is rejected the accumulated payments and application fee ($150.00) will be applied to your original tax liability and collection activity will resume.

Second Factor: Statute of Limitations

Foreword:  This factor represents the total number of months before the statute of limitations for collections expires. The collection statute is 10 years from the date of assessment. IRS notifications will provide the date of assessment for each year. To determine the number of months remaining before the expiration for collection with certainty IRS contact will be required to establish the dates of assessment in the event that you do not have the notification/s.

Statute of Limitations

Tax

Year

(A)

Expiration

Date

(B)

Months

Remaining

(C)

Total

Liability

(D)

Full

Payment

(E)

Required

Payments

(F)

Instructions:

Tax Year: List the tax years, earliest first.

Expiration Date: The date that the statute of limitations will expire which is 10 years from the date of original tax assessment.

Months Remaining: Determine the number of months or partial months remaining before the statute of limitation for collection expires.

Total Liability: List the amount of back taxes, including interest and late penalties owed for each tax year.

Full Payment: Divide the total liability by the net income previously calculated.

Required Payments: This will be the lesser of column (E) or column (C) minus all amounts previously included in column (F).

Your Second Factor: Total of Column (F).

Compare your first factor with your second factor if you chose either the Lump Sum Cash Payment Option or the Short Term Periodic Payment Option and multiply the the smaller of the two factors by the net income previously calculated to determine the total future income that must be included in your total offer amount. 

In the event, that you chose the Deferred Periodic Payment Option multiply your second factor by the net income previously calculated to determine the total future income that must be included in your total offer amount. 

- LIBRARY-

(suggested order)

It is our objective to answer your questions by providing the most complete, accurate, comprehensive and trusted single source of substantive detailed information available on the web today associated with offers to compromise.  As a consequence, we begin with this introductory article to provide an overview of the content and format characteristics of this site and our services.

This discussion provides general information to familiarize you with IRS eligibility requirements, constraints, fees, forms and formulas associated with compromising a delinquent liability, before addressing each of the specific issues in detail. 

This discussion provides detailed instructions to determine the amount of your adjusted net realizable equities or net worth that must be included in the amount you offer to settle your back tax debt. This calculation is the first of four mathematical components required when preparing offers for submission.

This article provides specific instructions to determine the amount of your monthly adjusted income subject to remittance and we will therefore address issues related to tax authority imposed financial standard parameters otherwise know as allowable monthly expense limits. 

This discussion determines the total amount of your future income that must be included in your compromise installment payment offer.

This article is the last in a series of four articles and will sum the mathematical components future income and net realizable equities to determine reasonable collection potential or the total amount that you must offer, payment terms and eligibility.

This discussion provides information about the IRS administrative process that occurs after you submit offers and will therefore explain the issues of processibility, evaluation and financial analysis. 

This discussion explains the impact that errors can have when preparing an IRS offer to compromise to settle back taxes, will provide statistical facts, a buyer beware warning and tips that will help you choose the services of a competent professional and simultaneously protect you from unethical State and IRS service providers.

An explanation of the preliminary services we provide to assure eligibility before you embark on a path that may result in rejection.

A complete glossary that provides the ability to quickly access articles and information to help with the accurate completion of the forms and formulas related to IRS compromise relief.

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