Asset Protection

Here is a Consumer Alert from the IRS. Beware of Offers in Compromise, which offer settlements of "Pennies on the Dollar":

IR-2004-130, October 25, 2004CHECK CAREFULLY BEFORE APPLYING FOR OFFERS IN COMPROMISE WASHINGTON -

The Internal Revenue Service today issued a consumer alertadvising taxpayers to beware of promoters' claims that tax debts can besettled for "pennies on the dollar" through the Offer in CompromiseProgram.Such promoters make money by inappropriately advising indebted taxpayersto file an application for an offer in compromise with the IRS, promisingunrealistic results, even when the taxpayers do not meet the requirementsof the program. This bad advice costs taxpayers money and time.Taxpayers may refer promoters who are using the program inappropriately tothe IRS's Office of Professional Responsibility for civil sanctions bysending their complaint to: Office of Professional Responsibility(SE:OPR), Internal Revenue Service, 1111 Constitution Avenue N.W.,Washington, DC 20224.An offer in compromise is an agreement between a taxpayer and the IRS thatresolves the taxpayer's tax debt. The IRS has the authority to settle, or"compromise," federal tax liabilities by accepting less than full paymentunder certain circumstances."This program serves an important purpose. But we do warn taxpayers towatch out for unscrupulous promoters charging excessive fees to taxpayerswho have no chance of meeting the program's requirements," said IRSCommissioner Mark W. Everson. "Taxpayers should not be duped byhigh-priced promises."Although there are some tax practitioners who promote dubious schemes,most practitioners give quality service to their clients. Taxpayers whoneed a qualified tax professional to prepare and submit their offer incompromise application form may contact state or local tax professionalassociations to find enrolled agents, CPAs or attorneys in theirgeographic area with the education and experience to assist them. The application package, IRS Form 656, Offer in Compromise, was recentlyredesigned with new instructions, worksheet and checklist to make iteasier for taxpayers to determine if they are eligible for the program andto accurately prepare the necessary forms. The July 2004 revision of theapplication form also contains a new paid preparer signature block.Taxpayers may wish to reconsider using preparers who hesitate to identifythemselves on the form.An offer in compromise may be considered only after other payment optionshave been exhausted. If taxpayers are unable to pay their taxes in full,there are other payment options, such as monthly installment agreements,that must be explored before an offer in compromise can be submitted.The IRS Web site at www.irs.gov contains information on the collectionprocess and payment options. Additional information is available in IRSPublication 594, The IRS Collection Process, and Form 9465, InstallmentAgreement Request. These documents provide complete information on alloptions available and help taxpayers determine if they qualify for apayment program.Taxpayers who are unable to pay their taxes in full and who have exploredthe various options should use the checklist in the Form 656 package todetermine if they are eligible for an offer in compromise.Some taxpayers may be exempt from the $150 application fee depending onincome or whether the offer in compromise is based solely on doubt as totax liability. Taxpayers who claim the income exception must certify theireligibility by completing Form 656-A, Income Certification for Offer inCompromise Application Fee. This certification should be attached to Form656 in lieu of the $150 fee at the time of submission. The Form 656package contains a worksheet designed to assist taxpayers in determiningwhether they qualify for the income exception. The income exceptionapplies only to individuals.The publications and forms are available at www.irs.gov or by calling1-800-829-3676 to order copies. All publications and forms are free.---------------------------------------------------------------------------