The Situation
Ruth and Daniel, a couple nearing retirement, owed $72,300 in federal taxes, penalties, and interest. After reduced earnings and a costly move into a smaller home, the balance had become difficult to manage. The case called for an analysis of whether the taxpayer could reasonably satisfy the debt from available assets and future income.
The Resolution Strategy
The team gathered home-equity analysis, retirement income, and relocation expenses, reconciled required returns, and prepared a financial analysis of reasonable collection potential. Rather than promising a percentage reduction, the team tested whether an Offer in Compromise based on doubt as to collectibility could be supported by income, expenses, and equity. Home equity remained an important part of the ability-to-pay calculation.
The Outcome
The IRS accepted a $18,000 compromise after completing its review. That resolves the $72,300 covered liability once the taxpayer meets the offer's payment and ongoing compliance terms. The reduction is $54,300, or 75.1%.
Names have been changed and photos are representative stock images used to protect client privacy. This case describes an individual situation. Eligibility and outcomes depend on each taxpayer's circumstances, are not typical or guaranteed, and past results do not predict future outcomes.
