Offers in Compromise

OIC Basics

100

An OIC is deemed accepted if not rejected by the IRS within this many months of submission.

What is 24 months

200

These are the four types of OICs

Doubt as to Liability

Doubt as to Collectability

Doubt as to Collectability with Special Circumstances

Effective Tax Administration

300

This section of the Internal Revenue Code authorizes the OIC process.

§ 7122

400

Which of the following is not a reason why an OIC can be rejected?

(a) Not in the Best Interest of the Government

(b) Public Policy

(c) Not in the Best Interest of the Taxpayer

(c)

500

Chapter 13 bankruptcy gives a debtor five years to pay priority taxes (i.e. all taxes from past three years). What happens to all other taxes after five years?

Discharged.

OIC-DATL

100

A taxpayer must pay at least this nominal in order for his OIC-DATL to be processed.

What is $1.

200

Chapter 10A called this form "the starting point for submitting an offer in compromise...for doubt as to liability."

Form 656-L

300

When the IRS rejects an OIC-DATL, this is the length of the appeal period.

What is 30 days

400

Taxpayer F has no assessed tax liability. However, F wishes to obtain a refund she believes she was due for tax year 2024. Taxpayer F:

(a) Should file an OIC-DATL

(b) Should file an amended return or audit reconsideration

(c) Should file an OIC-DATC

(d) Should file for bankruptcy

(e) Should meet with her favorite IRS agent at the local Applebee's and press him for government secrets

(b)

500

Taxpayer T intends to file an OIC-DATL based solely on a claim of innocent spouse relief. For faster turnaround, T should instead file what?

Form 8857.

OIC-DATC

100

Between an OIC-DATC and CNC, an OIC-DATC is the better long-term fix for most people because of all below reasons except:

(a) CNC does not eliminate the underlying deficiency

(b) Federal tax liens filed before CNC is granted remain in force

(c) Interest and penalties continue to accrue during CNC status

(d) The CSED continues during CNC but not while an OIC is pending

(d)

200

In IRS parlance, to "53" an account means to ____.

Place taxpayer in CNC status.

300

Taxpayer R owes $50,000 in back taxes. Taxpayer R then travels to the Ukrainian Donbas, pitches a tent, and holds an unrelenting "peace-in." The IRS attempts to file a tax levy against Taxpayer R's assets. Such IRS action is:

(a) allowed

(b) recommended

(c) Not allowed

(c) because taxpayer is in a combat zone

400

"Quick Sale Value" is standardized by the IRS as this percentage of Fair Market Value

What is 80%

500

According to the terms of which form, the IRS "will keep any refund that might be due for tax periods extending through the calendar year in which the IRS accepts" an OIC?

Form 656

OIC-DATCSC / ETA

100

Taxpayer must submit these documents for an OIC-DATCSC to be considered.

Form 433-A/B, Form 656-B, and supplemental documentation regarding the special circumstances.

200

Which is not a factor the IRS considers in determining whether economic hardship exists, for the purposes of an OIC-DATCSC?

(a) taxpayer age

(b) cost of living in taxpayer's area

(c) natural disaster

(d) chances of taxpayer finding a different job

(d)

300

OIC-DATCSC applications based on public policy or equitable reasons are all forwarded to a specialized IRS unit where?

Austin, TX

400

Approval of DATCSC applications based on public policy is:

(a) common

(b) extremely rare

(c) more common in the Bible Belt

(b)

500

The IRS will only grant an OIC-ETA where ____.

"doing so would not undermine compliance with tax laws."

OIC Grab Bag

100

Taxpayer X is a low-income taxpayer engulfed in bankruptcy proceedings whose tax deficiency has not yet been referred to the DOJ. X has not paid any of his tax liabilities and is current on his tax filing for the past six years. Can X file an OIC?

No--IRS will not process the OIC of a taxpayer who is in bankruptcy.

200

Taxpayer with an agreed OIC fails to timely file federal taxes in subsequent year. What is the likely result?

Default on OIC. Original liability returns in full, with interest and penalties. See Form 656, Section 7.

300

Taxpayer G disagrees with the IRS's determination of a tax liability for year 2023. Taxpayer G also thinks that even if a liability exists, it should be lower than the amount the IRS claims. Taxpayer G CANNOT:

(a) file an OIC-DATL

(b) file an OIC-DATC

(c) submit an OIC-DATL and a conditional OIC-DATC, to be reviewed if the OIC-DATL is rejected.

(d) Storm the gates

(c)

400

Under this congressional act relevantly codified as new § 7345, the IRS can notify the State Department of "seriously delinquent tax debt" and the State Department can refuse to renew taxpayer's passport.

FAST Act

500

This is the formula for calculating "net realizable equity (NRE) in assets"

Quick Sale Value – amounts owed to senior secured lenders