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 REASONABLE COLLECTION POTENTIAL, PAYMENT
TERMS AND ELIGIBILITY
The
previous three articles have provided detailed
instructions, guidance and information to determine net realizable equities, net
income and future income values. This article
the last of the series will determine reasonable collection potential,
payment terms and eligibility.
REASONABLE
COLLECTION POTENTIAL
Reasonable collection potential (RCP) is
define as the total amount that
can be collected from all sources and represents the
total amount that you must offer to compromise back
tax debt, late interest and penalties.
Therefore, reasonable collection potential
generally includes your net adjusted equities
plus the amount of future income previously determined
unless special circumstances apply.
Special
circumstances may include factors such as advanced
age, serious illness from which recovery is unlikely
or unusual circumstances that impact your ability to
pay the total reasonable collection potential and
simultaneously provide for the necessary living
expenses of the taxpayer and, his or her family.
OFFER
IN COMPROMISE ELIGIBILITY
If the
reasonable collection potential is more than the total
liability you are not eligible to participate in the
offer in compromise program on doubt as to
collectibility grounds and alternative actions should
be explored.
When
reasonable collection potential is greater than the
total liability, but there are economic hardship
circumstances, public policy or when equity situations
apply you may submit an offer based on effective tax
administration.
INSTALLMENT
PAYMENT TERMS
Reasonable
Collection Potential divided by the number of months
as dictated by the payment option selected and
generally not to exceed your future income factor will yield the installment
payment amounts you will be required to offer in
compromise
