Ask The California Employment Tax And Payroll Tax Attorney – Offer In Compromise Mills – No Thanks

By Robert S. Schriebman

2024

Introduction

You have seen their ads on TV for years and probably heard them on the radio. A happy couple is telling the audience they owed the IRS a huge sum of money and the advertising company got them a deal for 5 cents on the dollar as they drive off into the sunset in their new high-end vehicle. All you have to do is give the company a call and your IRS worries are over. For the most part it’s all a lie. Offer in Compromise mills are owned and operated by people who do not have the professional ethical standards to govern their operation as do licensed attorneys and CPAs.

Taxing agencies such as the IRS, FTB, and EDD all have an Offers in Compromise (OIC) program. This article will discuss OICs generally and warn you about doing business with unethical scammers such as OIC mills. An OIC mill is simply a business whose objective is to obtain as many customers as possible through media advertising, promising the world but delivering very little.

The Basics of OICs

For those who qualify, an OIC is the government’s equivalent of “Let’s Make a Deal.” Qualified taxpayers can have their outstanding tax debt virtually cancelled by paying pennies on the dollar as payment in full. These are little publicized procedures allowing taxpayers to settle tax disputes as well as delinquencies by offering to pay a fraction of their legal tax debt. The OIC has been a part of the federal tax law since 1831. Perhaps it is the oldest surviving tax provision in all of the versions of the Internal Revenue Code.

An OIC has many advantages. It can save you a substantial amount of money, as well as time and the expense of costly tax litigation. If the IRS accepts your offer, all tax liens recorded against you are immediately removed even though you may still owe the IRS. the same can be said for OIC programs of the FTB and the EDD.

Beware of OIC Mills

Companies running OIC mills continue heavily advertising their promises to settle taxpayer debt at steep discounts for pennies on the dollar. This sounds wonderful, but very few people qualify for this type of relief. They simply do not meet the technical requirements for the OIC program. Mills charge excessive fees, but most of the time the results are disappointing. The problem is that OIC mills know this going in, but their business is to make money. P.T. Barnum is famous for his maxim, “There is a sucker born every minute.” When it comes to OIC mills, Barnum’s old maxim is alive and well.

OIC mills try to pull in steep fees while raising false expectations and exploiting vulnerable individuals with promises that the debt can magically disappear. These are the words expressed by IRS Commissioner Danny Werfel. Mr. Werfel spoke these words as part of the IRS’ annual Dirty Dozen Tax Scam Forum.

The Dirty Dozen Forum warns the public to be cautious of OIC mills, which make exaggerated claims through radio and TV ads about settling tax debts inexpensively. Vulnerable taxpayers wind up paying for a service they could have obtained for free directly from the IRS.

Taxpayers should spend a few minutes reviewing information on “IRS.gov” to determine their eligibility for the OIC program. They can use the IRS’ “Offer in Compromise Pre-Qualifier Tool.” It’s free!

Doing It Right

I often get calls from perspective clients wanting to retain my services for an OIC. I always conduct a pre-offer interview. During the interview, I use a financial statement template to determine if the potential client qualifies. If the client is still in his/her productive years, has a profession, and has equity in their home or other property, he/her usually does not qualify for an OIC. It is best to know this from the beginning to avoid future disappointment. Some people do not understand that an OIC, if accepted, is going to cost them money to the government. The OIC process is not a “get out of jail free” card.

The Collateral Agreement

Even if you qualify for an OIC and you are willing to pay price demanded by the government, that may not be the end of the matter. The collateral agreement is a separate contract that states, in substance, that as you make more money over the next several years, you will pay the government an additional sum toward the OIC depending upon a predetermined percentage of “excess income.”

OIC mills may not tell you about the collateral agreement.

Conclusion

For those who qualify the OIC can truly be a blessing. The government is paid, and liens are released. To see if you are a viable candidate for an OIC, contact an experienced and ethical tax practitioner. These professionals are bound by strict codes of ethics. OIC mills have no ethical standards and no one to look over their shoulder to make sure they are frank and honest. They are there to take your money and to deliver very little if nothing at all.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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