Darrin T. Mish convinces IRS to settle $145,000.00 tax debt for $24,000 by threatening Bankruptcy
Not long ago a gentleman came to see me about a tax problem. He was a hairdresser who actually lived in Manhattan but was from Florida and still had family in the area. He had not filed returns for some 10 years! Although he thought that that was terribly unusual, you may find it shocking that it isn’t that unusual in my experience. After consulting with him, we assisted in the preparation of the “missing” returns. After the returns were complete, the balances totaled approximately $145,000.00 after all of the interest and penalties were added to his tax balances.
As we do in many such cases, we promptly filed an Offer in Compromise. As you may be aware, an Offer in Compromise is an IRS program that allows some taxpayers to settle for less than the full amount that they owe. After some time, the IRS rejected his Offer and indicated that he had enough to pay off the balance in full. Realizing that this was a ridiculous position we filed an Appeal of that decision. While I didn’t have a great legal argument, I did have one last card up my sleeve. You see, the Internal Revenue Manual says that if a taxpayer threatens bankruptcy, then the IRS must calculate what they would likely receive after the bankruptcy was over.
Many people don’t even know that taxes can be dischargeable in bankruptcy. In a nutshell, three factors must be present in order to discharge taxes in bankruptcy. First, the taxes must have been due (including extensions) more than three years ago. Second, the returns (if filed late) must have been filed for at least two years. Third, the taxes must have all been assessed more than 240 days ago. Assuming no fraud has occurred, and the three factors listed above exist, the taxes are dischargeable in bankruptcy!
Back to the story, initially I ran this argument past the Revenue Officer working on the Offer in Compromise. I politely indicated that my client may likely have to file bankruptcy and that accordingly she should consider our Offer if we agreed to raise the amount offered to $24,000.00. This is the amount he would still be liable for even after a bankruptcy. She quickly denied our request and indicated that she did not believe that my client would actually file bankruptcy. She actually said, “go ahead, I don’t care if he files bankruptcy or not. I’m not taking that Offer.” Lucky for my client, the IRS has an Appeals Division for exactly this type of response. Once we filed the appeal and conducted the hearing, the Appeals Division used common sense and realized that it was in the government’s best interest to take my client’s Offer. The client benefited because he didn’t have to file a bankruptcy and even had all of his Federal Tax liens removed. A success story any way you look at it.
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Comments on Darrin T. Mish convinces IRS to settle $145,000.00 tax debt for $24,000 by threatening Bankruptcy
Big problem !!!! my husband is illegal, but thats not the problem, he has a pin number for tax purposes and so he filed one year and he ended up owing money. but like the dumb but he was he never paid. now he owes over 7,000. but heres the problem, he only owes becaus the guy he was working for before received a large check divided the check between the guys, and in return lied about his taxes . my husband never received a check stub. so we are in process for his papers and i cant keep filing separate from him , but i DEPEND on my tax return , we have 3 children(one being his).my father has told me that if we were not married at the time he filed that i dont have to take on the "Bill". even thoe he should not owe anyways because he never received a check stub, and the fact that hes illegal. is this true? and how do i find out when he first filed if its true. seriously needing advice!~karey.