Contents:
Introduction, Essentials, Net Realizable Equities, Net
Income, Future Income, Reasonable Collection Potential,
Process, Consumer Protection Message, Compromise Help,
Table of Contents, IRS Manual.
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.
To
calculate future income 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. Future Income
equals the lesser of the number of months prescribed
by the payment option you chose or the number of
months until the statute of limitations on collections
expires times your adjusted net income.
First Factor:
Options
Lump
Sum Cash Payment Option:
Parameters:
Total offer amount will be paid in 5 or fewer months and
20% of the total offer is to be remitted at the time that
you submit your offer in compromise. Your
First Factor: 48 months.
Short
Term Periodic Payment Option:
Parameters:
Total
offer amount will be paid in 5 or more
months but 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 Statute of Limitations on collections
expires and you therefore you have no First Factor:
All
options require your initial installment payment and
payment schedule commence with submission of your
offer in compromise. If your offer is accepted as
processable but later 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
including partial 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) |
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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 adjusted 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 adjusted net income
previously calculated to determine the total future
income that must be included in your total offer
amount.
