Some of the more common special issues include dissipated assets, the retirement of debt and real estate valuation.

Dissipated assets

The assumption on dissipated assets is where the taxpayer has unnecessarily spent monies received on the sale of assets that could have otherwise been used in the satisfaction of your tax debt.  For example, let’s say you sold a piece of property and used the proceeds in the payment of tuition for the education of your child. You may consider the use of the money to be of greater importance than the satisfaction of tax debt you may owe. Similarly, you may be of the incorrect assumption that if you spend your available cash, there would be nothing available to the IRS and you would not have to pay.

Unfortunately, this is often not the case. In such cases, where the IRS can assert that you’ve unnecessarily spent or somehow squandered the money, the IRS will treat the proceeds as if the asset sale had never existed and the assets are currently available in evaluating the collection potential, or what you have available in the satisfaction of your tax debt to the IRS.

Retired Debt

Retired debt is where the taxpayer uses monies on the payment of other liabilities rather than the payment of tax debt.  For example, where a taxpayer who uses proceeds to pay off a car loan rather than pay the tax debt, the IRS will view this the payment of the debt as if the car loan and proceeds were still available in evaluation the collection potential, or what you have available to satisfy your tax debt.

Valuation of Real Estate

Taxpayers will often be asked by the IRS to take an equity loan from real estate holdings, including their residence, to make money available to satisfy outstanding tax debt. This is a method by which the IRS can shift the debt burden to other third parties, such as banks, for tax debt you may owe, where the IRS believes you have sufficient equity in your home, or other real estate, necessary to pay your taxes.

Other Issues

There are many other complex issues to be equally considered in structuring an acceptable or successful offer-in-compromise. For this and other reasons, it is recommended that you obtain professional representation by a skilled, experienced professional who can assist you in reviewing your options and structuring agreements that meet the qualifications you will need and have a high likelihood of acceptance.