In my last post I discussed Joe and Mary and the $187,000 that they owe in Back Taxes to the IRS and the $28,000 that they owe to the State of Utah.  We also discussed that Joe and Mary earned a combined monthly income of $11,500 and we discussed their monthly expenses.  Joe and Mary filed their 2014 – 2018 tax returns to get into tax compliance and then went to a tax controversy specialist to file an Offer-in-Compromise (more on this later).  Here is the information they provided to the IRS:

 

Monthly

Income:

   Monthly

Expenses:

  
Joe $7,500 Food, Clothing, Etc. $1,500
Mary $4,000 Housing & Utilities $4,525
Car Operating Costs $1,000
Health Insurance $695
Misc. Health Costs $200
Child Care $375
Current Year Taxes $2,875
Secured Debts $175
Delinquent State Taxes $500
Union Dues $130
TOTAL EXPENSES $11,975
TOTAL: $11,500 NET DIFF ($475)

 

The tax controversy specialist filed the Offer-in-Compromise and promised Joe and Mary “this is a slam dunk! You owe nothing!”  So, was it a “slam dunk”? NO!!! Their Offer-in-Compromise was rejected.  Why?  The tax controversy specialist did not understand how to calculate the RCP.  Interestingly enough most don’t.  In my next post we will do the math or calculate the RCP correctly.  If you or someone you know has tax problems, feel free to reach out and contact us. (801) 532-7080 – ask for Kent.  https://strongandhanni.com/attorneys/attorney-kent-brown/