What Is An Offer In Compromise

Share on Facebook0Share on LinkedIn0Pin on Pinterest0Tweet about this on TwitterShare on Google+0

DARRIN T. MISH:  Good morning, this is Darrin T. Mish, the IRS Solution Attorney.

KATRINA MADEWELL:  And I’m Katrina Madewell, I’m your co-host. I was just thinking what are we going to do if they decide they want to replay the show in the afternoon and you just said good morning Tampa Bay?

DARRIN T. MISH:  Well, I guess they will understand that we must since it’s morning somewhere.  Right?

Click The Image Above (Or Here) To Start Podcast!
 

Click here to listen to other IRS Back Tax Help episodes.

 

 

 

Click here to watch or read more information on IRS Back Taxes.

KATRINA MADEWELL:  It’s always 5 O’clock somewhere, right.  For sure, for sure.

DARRIN T. MISH:  Well, we are in fact live today.

KATRINA MADEWELL:  We are live and, in fact, we are so live we are going to be giving away a 4 pack of tickets a little later in the show for the St.Pete bowl and if you are not familiar with this, this is…correct me Darrin if I get this wrong, the SEC vs The Mid-Atlantic?

DARRIN T. MISH:  That is correct it’s the SEC, the arguably the best conference in college football against the Mid-Atlantic which is not the best conference in college football.

PAT GEORGE:  What teams are playing, Katrina?

KATRINA MADEWELL:  Give me my cheat sheet, Darrin.  Mississippi State, and I had to ask Charlie about this because you can tell that I do not watch college football, but it’s in fact Mississippi State against Miami of Ohio. I’m like, is this a typo is what I was asking. No, that’s the name of the college Miami of Ohio and they are playing Monday December 26 at 11 am at Tropicana Field.

DARRIN T. MISH:  Clearly the station manager should have given me the promo to read.  In fact, Mississippi State versus Miami of Ohio.

KATRINA MADEWELL:  Giving away 4 free tickets.

DARRIN T. MISH:  Tropicana Field December 26th 11 am, very cool venue for football.

KATRINA MADEWELL:  We are going to make you wait, we will do it a little later in the show so stick around listen in.

PAT GEORGE:  Your opportunity comes up now to tell us about your California trip.

DARRIN T. MISH:  Well, we went out to California for a wedding…

PAT GEORGE:  How warm was it?

DARRIN T. MISH:  It was freezing.

KATRINA MADEWELL:  So, this was the whole, this is the joke of the studio last week.

PAT GEORGE:  We were laughing on Friday.

DARRIN T. MISH:  It was freezing…

KATRINA MADEWELL:  He was like I am escaping the cold, yeah.

DARRIN T. MISH:  It was like a high of I don’t know 55 or something like that.

PAT GEORGE:  Right.

DARRIN T. MISH:  But, we went to DisneyLand on Friday and kids have never been there and they have been dying to see what DisneyLand was all about because they have kind of grown up going to Disney World. If had my choice of being a little bit cool or too hot going to a Disney park, I am going to vote for cool pretty much every time because I have done that hot thing way to many times. Disney Land was just like I remembered it. It was crowded…

PAT GEORGE:  And small.

DARRIN T. MISH:  And smaller, different, there’s quite a lot that is different from the Magic Kingdom than…

KATRINA MADEWELL:  Pat’s a Disney fan, he worked for radio Disney forever so it’s like music to his ears.

PAT GEORGE:  Yeah, DisneyLand is so small, they only have Mickey.

DARRIN T. MISH:  So, we were walking out of the park and you could hear like a cap gun going off in the…

PAT GEORGE:  That was the neighborhood outside the fence.

DARRIN T. MISH:  That could be true. Anaheim is not….

KATRINA MADEWELL:  I’ve never been there.

DARRIN T. MISH:  But, it was the cap gun from in the Jungle Boat ride at Disney Land. At one point the guide shoots off the cap gun twice in the air and you could hear that in the parking lot or at least, not really the parking lot anymore cause the parking lot is now California Adventure, but from the front gate you could hear the cap gun.

KATRINA MADEWELL:  Darrin’s like, oh, Disney Lands changed a little bit.

DARRIN T. MISH:  Well, the biggest thing for me having grown up in the 80’s, 70’s and 80’s going to Disne Land.  When I got there, I was really disoriented because the parking lot, as I recall, was not there anymore because there is a theme park there now California Adventures literally where the parking lot used to be. The way you get in and everything is completely different.  It took about, very much like Magic Kingdom here in Florida where it’s not the most convenient park to get into, you know you have to go to that transportation thing…

KATRINA MADEWELL:  It takes an hour just to get in…

DARRIN T. MISH:  And, you’ve got to get on the boat or the Monorail, well Disney Land is kind of similar you have to stay in this traffic line for 30 minutes to get into the parking structure so at least they have that in common.  We did have a good time, sounds like we didn’t but we had a good time.  California Adventures really…

KATRINA MADEWELL:  So, Pat and I were laughing Friday for Tampa home talk we were like I wonder how warm Darrin is…

PAT GEORGE:  We were looking at the map the entire map was kind of in blue and only Florida was still yellow and we said it’s just as cold there look at this.

KATRINA MADEWELL:  It was actually colder, remember.

DARRIN T. MISH:  This is why we live here right, I mean the weather in the winter here is just really ideal in my mind.  Now, the summer not so much but…

KATRINA MADEWELL:  Hence the snow birds become the permanent residents.

DARRIN T. MISH:  Exactly.  Well living in Zephyr Hills. I mean there is nobody in Zephyr Hills in the summer time.  I have a funny church story. We go to the Catholic church in Zephyr Hills and when we started attending there, it was the summer and literally it’s like you know a ghost town there is just really almost nobody there. There’s tons and tons of room. Empty pews and what not, and we were kind of thinking, well, maybe this was like a dying church. But over the last several months as the snow birds roll in now you have to get there early or there is no place to sit and it’s all covered up in walkers and wheelchairs…

KATRINA MADEWELL:  Competing with the snow birds…

PAT GEORGE:  Does this church happen to be on highway 54?

DARRIN T. MISH:  Yeah, it is pretty much.

PAT GEORGE:  I think I know where that church is. Now they have a deputy out there directing traffic because it’s so busy on Sundays.

DARRIN T. MISH:  Is that right, is that right.

KATRINA MADEWELL:  Pat probably knows the deputy too.

PAT GEORGE:  Well, I don’t know if I know the deputy, but I do know that if you come through there when church is letting out you are not getting any further then Home Depot.

DARRIN T. MISH:  So yeah, it’s quite a different story when the snow birds are in town but we like them, we love them actually with because snow birds pay our taxes, they really do.

KATRINA MADEWELL:  They help.

DARRIN T. MISH:  That’s why, one of the many reasons why we don’t have…

PAT GEORGE:  Yeah, they keep everybody at Cracker Barrel employed.

KATRINA MADEWELL:  So now…

DARRIN T. MISH:  And they keep us building new roads because when they show up the traffic gets…

KATRINA MADEWELL:  Yes, we need them before they get here.  So, we’ve got some tickets to give away a little bit later for the St. Petersburg bowl again that’s Mississippi State versus Miami of Ohio and we will do that in a little bit and today’s show is all about Offers in Compromises right?

DARRIN T. MISH:  Yeah, I’m really excited about doing this show. Been wanting to do it for a long time.  We are going to talk about how Offers in Compromise are actually easier than ever to get approved and they are a better deal than ever. I think now’s the time if you have a significant tax debt, now’s the time to try and take advantage of this because we are on the, kind of with the outgoing Obama administration, the incoming Trump administration.  No one knows if there is going to be changes to this program and right now this program is almost too good to be true.  An offer in compromise is where you make a deal to settle for less with the IRS and if you are a long term listener to the show when you hear my segment usually in the last segment of the show called the IRS train wreck of the week that’s when I tell a war story. Basically a story where somebody came into the office and they were kind of a train wreck because they owed so much money to the IRS and that story always has a happy ending. I would say about 80% of those stories are because we filed offers in compromise, they made deals.

KATRINA MADEWELL:  Which we talk about it a lot but we kind of brush through it so I’m glad that we dedicated pretty much a whole show to this.

DARRIN T. MISH:  Yeah, we talk about it a lot, but we don’t talk about the nuts and bolts a lot because me being in the industry, I don’t think it’s all that interesting. But if it’s one of those things that if you don’t know then it is interesting, right?  And I have a fabulous train wreck of the week this week so you are going to want to stay tuned for that.

KATRINA MADEWELL:  This year, yes, this year is almost over.

DARRIN T. MISH:  This year is in fact almost over.  So, an Offer in Compromise is where you make a deal to settle for less with the IRS and it’s basically a relatively simple math equation and like anything else in the law there’s nuance. But the math equation goes like this, your monthly disposable income times 12 plus your assets equals the amount of your offer.  So, let me give you an example…

KATRINA MADEWELL:  Yeah let’s do a math number break down.

DARRIN T. MISH:  If your monthly disposable income was a hundred bucks…

KATRINA MADEWELL:  Wait, should we start with the tax debt?

DARRIN T. MISH:  Ok, sure.

KATRINA MADEWELL:  Let’s say somebody owes a hundred thousand in taxes.

DARRIN T. MISH:  Ok, kind of small…

KATRINA MADEWELL:  Ok so well in your case $250,000…

DARRIN T. MISH:  No, it doesn’t matter it really doesn’t matter…

KATRINA MADEWELL:  Alright 300 fine $300,000.

DARRIN T. MISH:  Well the problem with a $300,000 example is it’s kind of hard to relate for somebody who owes 75 or 50 you know what I mean?  So anyway…

KATRINA MADEWELL:  So which number are we rolling with Darrin?

DARRIN T. MISH:  A hundred grand is fine.

KATRINA MADEWELL:  Alright, so a hundred thousand dollar tax liability…

DARRIN T. MISH:  Hundred thousand dollar tax liability.

KATRINA MADEWELL:  And this is someone’s past like they filed their taxes, that’s how much they owed and they basically never paid it.

DARRIN T. MISH:  Yeah, and there’s you know half of that is penalties and interest and so it’s kind of a funny, fuzzy number anyway.

KATRINA MADEWELL:  So it may have started off 50 and now it’s a hundred…

DARRIN T. MISH:  Yeah, yeah and it’s gone on for a period of time and typically you would be some kind of self-employed person and you didn’t really know what you were doing and you didn’t pay your taxes as you went like you were supposed to and you know we could talk and talk about that but that’s not really the point.

KATRINA MADEWELL:  So, hypothetically speaking…

DARRIN T. MISH:  They owe a hundred grand and let’s say your monthly disposable income is a hundred bucks.

KATRINA MADEWELL:  And disposable income is where after you pay your allowable expenses which we should chat on what that is…

DARRIN T. MISH:  Sure.

KATRINA MADEWELL:  That’s how much you have left.

DARRIN T. MISH:  Let’s define monthly disposable income, your monthly disposable income is the difference between your gross income. So you gross income is everything minus your allowable expenses.  Now, the key word in that sentence was allowable, right? So the IRS has charts for housing and utilities and transportation and all kinds of different categories  and expenses with the maximum allowable expenses so allowable…

KATRINA MADEWELL:  Is it related to income or is it in general?

DARRIN T. MISH:  No, it’s not related, it’s not means tested. It’s related to where you live. So, for example, your housing and utilities is going to vary based upon what county you live in and how many people are in your family.  So, literally there is a chart that has every county in the country on it and those change pretty much yearly so not hard to believe that we have software that does this for us right now there are places on the web you could look this up and stuff but the point of me explaining allowable expenses is the key is it’s not actual expenses so for example if you are paying $4000 a month to live on the water you know here in the Tampa Bay area it’s going to be more than the allowable expense..

KATRINA MADEWELL:  He’s talking about Santa.

PAT GEORGE:  It’s your new bumper music because it’s the holiday season time to take a break.

KATRINA MADEWELL:  Alright, so this is a little bit longer than the 30 seconds we have left…

DARRIN T. MISH:  Absolutely…

KATRINA MADEWELL:  So, we will talk about monthly disposable income and get back to why it’s the best time ever to get an offer in compromise accepted is that right?

DARRIN T. MISH:  Sounds good to me.

(commercial break)

KATRINA MADEWELL:  Pat George back there doing a great job thanks for joining us. Hang onto our call in number it’s 888-404-1010 cause we are going to be giving away the tickets to the St. Petersburg bowl, it’s going to be a family 4 pack of tickets 888-404-1010 hold onto that number when we come back in just a short we are going to tell you when to call 888-404-1010 tell your friends we will be back in a minute.

DARRIN T. MISH:  Welcome back to the IRS Solution Attorney show. I am your host the IRS Solution Attorney Darrin T. Mish.

KATRINA MADEWELL:  And I’m your co-host Katrina Madewell, thank you so much for joining us and sticking back around.

DARRIN T. MISH:  Some of the best parts of radio you actually can’t, obviously you can’t see.

KATRINA MADEWELL:  Unfortunately.

DARRIN T. MISH:  Right.

KATRINA MADEWELL:  We try and describe it to you.

DARRIN T. MISH:  And we all eventually go to Facebook live or some other live streaming source for these shows in the very near future but one of the best things was watching Pat George rock out to that Christmas song with a big goofy grin on his face.

KATRINA MADEWELL:  I know. We are going to have to like Facebook live him in to so that, so that the audience can actually see him because really, Pat, you are the highlight of the show sometimes. Really you guys don’t see that, you hear us but we are watching him.

PAT GEORGE:  Ho, ho, ho! I’m Santa Clause and you are my elves.

KATRINA MADEWELL:  See, you don’t see all the goofy stuff that he does where he is always like trying to mess me or Darrin up we are right in the middle of trying to explain something, explaining…

DARRIN T. MISH:  So, at the close of that last segment I don’t know, I guess I was so into what we were talking about that it didn’t really occur to me that the music he was playing was for the break and so I looked over at him like what are you doing you are screwing up my deal and that’s why he had to come in and explain what he was doing.

KATRINA MADEWELL:  I know you had this puzzled look on your face like why is he playing Christmas music what’s, the matter with him

DARRIN T. MISH:  Right over the top of it.

PAT GEORGE:  I forgot to tell you at rehearsal.

DARRIN T. MISH:  Well, that’s why you can tell that I’m not a professional radio guy, I just play one on the radio once a week.

KATRINA MADEWELL:  Well, I mean that’s the thing though, thank goodness, you are not a professional radio guy cause that means your real job is you help people get IRS problems solved.

DARRIN T. MISH:  Yeah, my real job is to play defender of the poor and downtrodden all day every day it gets the evil government.  So, we are talking about why right now I think is the best time ever to file an offer in compromise because I just think that there’s, well you will hear in a little bit why I think it’s the best time. But let’s get back to my hypothetical example where we were talking about how is an offer calculated. Well, you take your monthly disposable income, which is the different between your gross income minus your allowable expenses, so your monthly disposable income times 12 plus your assets and that equals the amount of your offer.  So, I’m going to get to my hypo here, hundred bucks in monthly disposable income times 12 that’s $1200 let’s assume you have no assets you can settle that case for 1200 bucks even if you owe a hundred grand now that seems rather sensationalistic and maybe a little bit unrealistic but I can tell you it’s not it happens all the time.  Now if you had some assets of course the value of your assets has to be added in so let’s do a little bit of an asset example here…

KATRINA MADEWELL:  Because people typically have some stuff really, they are going to have cars and, I don’t know what they look at but everything…

DARRIN T. MISH:  Yeah, they look at everything but your personal property, which is by definition everything besides your real property, your personal property you have a $9000 exemption and most people if you rolled all their possessions out onto the street and had a garage sale you know this Saturday you are not getting nine grand.

KATRINA MADEWELL:  Pennies on the dollar.

DARRIN T. MISH:  For their stuff in their house because what’s a used couch worth? So ,usually personal property is not the issue. Usually cars are not the issue because so many people are upside down on their cars sometimes. They are, but you get a little bit of an exemption for cars as well in terms of asset valuation.  The big problem tends to be people’s homes and I’ve been doing this so long that I’ve seen where, when I first started doing this back in the late 90’s no one had any asset, any equity in their homes here in the Tampa Bay area and then we went through this boom where everybody had tons of equity in their homes and so lots of cases we had to refer out to mortgage brokers so people could borrow money and pay off their IRS debt and now we are back to nobody has much equity in their home although there is this, you can see the trend now there’s people getting more and more equity in their home so…

KATRINA MADEWELL:  I was going to say it’s debatable. If you bought when everyone was selling you would be riding the happy train right now.

DARRIN T. MISH:  Depends on when you bought, for sure. Here’s how the calculation for the asset equity works. They take your fair market value so let’s just say, let me do some easy math here, let’s say your house has a fair market value of a hundred grand and I know that’s kind of unrealistic, but it’s easy math, so it’s a hundred thousand dollar fair market value…

KATRINA MADEWELL:  So, we owe as much as our home is worth to the IRS.

DARRIN T. MISH:  Well let’s say you owe, let’s say you owe $70,000 on that $100,000 house ok not unrealistic, $100,000 house that you are going to take the quick sale value that’s 80% so that would mean your house is, the quick sale of your house is $80,000, you owe $70,000. So instead of having $30,000 equity in the house using that calculation you only had $10,000 equity in the house does that make any sense?  So, in that case…

KATRINA MADEWELL:   Yeah, so if they had to do a fire sale it would be less.

DARRIN T. MISH:  That is what the quick sale value is all about it’s this is a, you have to sell it fast so you will have to take a discount on it and so there’s lots of different variations about how assets are valued and what not. Typically, we are going to be aggressive, aggressively low when we put the value of an asset on there, sometimes we have disagreements with the IRS and we kind of work that out. But the interesting thing about these negotiations is everybody thinks that lawyers just go in like, they think of lawyers, they think of personal injury lawyers right where you doing a negotiation with the insurance adjuster and you are kind of trading horses and you know you are going to split the baby and you are going to work it out, but in the context of what I do for a living, we fight over minutia because all the minutia has to go into that calculation of monthly disposable income times 12 plus assets and so every dollar is worth 12 bucks in this calculation. That is what we end up fighting about well we end up fighting about and how much the house is really worth, how much is the car worth, those types of things.

KATRINA MADEWELL:  And in reality it’s 80% or less?

DARRIN T. MISH:  Yeah, it should 80% or less and a lot of times the IRS is going to want to take http://www.zillow.com/ value as realistic and as you know being in the business that’s not always right it’s very, very rarely right.

KATRINA MADEWELL:  It’s so far from right it’s either to way to high or way to low we see that a lot.

DARRIN T. MISH:  And then so since that’s kind of….

KATRINA MADEWELL:  People think agents always complain about Zillow but what they don’t see is the call that we had to take from a seller because Zillow reported their home as a foreclosure and they weren’t even in default.

DARRIN T. MISH:  I’ve seen that.  Since the IRS wants to take Zillow, cause typically Zillow will be high then we will use the property appraisers just market value which as you know is ridiculously low and so then…

KATRINA MADEWELL:  Especially if they have had homestead and they have been there for a long time.

DARRIN T. MISH:  Exactly, so we will end up having little fights about how much is the house really worth and we usually get that worked out. But the point is that before 2012 the way an offer was calculated was different, before 2012 it was monthly disposable income times 48 instead of monthly disposable income times 12 and so that means that offers are settling for 75% less than they were prior to 2012. I can remember distinctly when this, when this law or this rule came out where they modified this they reformed. that’s a good word right, they reformed the offer in compromise program to make the modifier 12.  I was really skeptical. I was like oh come on. this is too good to be true. This isn’t going to happen.

KATRINA MADEWELL:  What happened that made them do that?

DARRIN T. MISH:  I don’t even know and I’m in the business, I have no idea. I think, I think it was tied to some President Obama economic relief package or something I think it was all wrapped up in the fact that you know there is lots of people suffering and so we have to help these people and so on and so forth.

KATRINA MADEWELL:  And so it’s still there and it might not be there.

DARRIN T. MISH:  It might not, it’s hard to say. But it might not be there if we end up in a booming economy again it might go back to a multiplier of 48 so that would have the practical effect of making offers 4 times more expensive right so and even when we had that old program, my firm was still busy, we had lots of clients and we were helping lots of people we were just helping them in a different way and so…

KATRINA MADEWELL:  And as we’ve talked a bunch of times like this is not anything that anyone ever wants to deal with, so it goes on the back burner and so this is something if you know someone owes some money to the IRS, this is what Darrin’s telling you, is this is the time more than ever to kind of grab the bull by the horns, deal with it and knock it out because you may end up having to pay more later if you wait.

DARRIN T. MISH:  And I hate to make the show, turn the show into an hour long commercial for the firm, but that’s not what I am doing here today, what I’m doing is I’m trying…

KATRINA MADEWELL:  Well, this is accurate information that could change at any point.

DARRIN T. MISH:  I’m actually trying to sound the alarm like now is the time if you owe say $50,000 or more to the IRS and you are having trouble paying it back now is the time, strike while the iron is hot because we don’t know.  I don’t think the laws going to change in the first year because I think there’s going to be higher priorities but in year 2,3,4 you can definitely see this thing change and it could, the pendulum could swing back.  I’ve been doing this long enough that I’ve seen the pendulum swing from easy to hard, from hard to easy and right now we are in this easy stage and we don’t know if it’s going to stay that way.

KATRINA MADEWELL:  Just to play devil’s advocate for a minute because I see that you get some push back as well on your Facebook page, so people think if I owe $100,000, I have to bite the bullet and pay it or I have to pay my taxes when it’s due. So how is it fair to someone that hasn’t filed taxes in 5 years that owes a hundred grand and has to do all this stuff to get off and pay, did we decide what that final number could be possible settled for I mean it depends on the disposable income but in our scenario what does that look like?

DARRIN T. MISH:  Just like everything in the law, everything is dependent upon the specific facts and circumstances of the case right so I want to dress the unfairness issue because..

KATRINA MADEWELL:  Already, alright, so come on we’ve got about a minute.

DARRIN T. MISH:  I want to address the unfairness issue because my mother who is still alive used to always tell me as a kid that life’s not fair and that’s the deal life is not fair. This law is here to be taken advantage of and if you don’t take advantage of it and you can that doesn’t make you noble, that doesn’t make you more virtuous, it makes you a sucker. The law is there for purposes to help people like you if you can’t afford to pay your taxes to settle for less so that you could move on. It’s very similar to bankruptcy, lots of people have moral objections to bankruptcy but bankruptcy is there so that your life is not ruined because you have made some bad financial decisions.

KATRINA MADEWELL:  It’s there to protect you.  Alright hold onto the number 888-404-1010 when we come back in the next segment we are going to be giving away or family 4 pack to the St. Petersburg bowl stick around we will be bake in a minute.

(commercial break)

KATRINA MADEWELL:  Oh, there is Darrin’s favorite song.

DARRIN T. MISH:  By request by Pat George.  Welcome back to the IRS Solution Attorney show.

KATRINA MADEWELL:  I’m your co-host Katrina Madewell.

DARRIN T. MISH:  I am the IRS Solution Attorney, Darrin T. Mish today..

KATRINA MADEWELL:  So today’s show.

DARRIN T. MISH:  Today we are talking about how, what how…

KATRINA MADEWELL:  Other than reindeer.

DARRIN T. MISH:  Today, we are talking about grandma getting run over by a reindeer no we are talking about the IRS and IRS’s program the offer in compromise and why right now is the time if you owe a tax debt to the IRS now is the best time to go ahead and try and get that thing settled.

KATRINA MADEWELL:  Guess what else it’s time for?

PAT GEORGE:  Buying Christmas presents and he wants us to pay an IRS bill in this month.

KATRINA MADEWELL:  I know he’s like the Grinch.

PAT GEORGE:  Yes, Mr. Grinch.

DARRIN T. MISH:  I’m the opposite of the Grinch.

KATRINA MADEWELL:  You are a mean one, Mr. Grinch.

PAT GEORGE:  Have you even started buying any Christmas gifts?

DARRIN T. MISH:  Who, me?

PAT GEORGE:  Yes.

DARRIN T. MISH:  No.

KATRINA MADEWELL:  Heather does a lot.  Are you kidding, Heather does all of that.

PAT GEORGE:  Wants me to pay my income tax and I don’t even have money to buy gifts, do you know how much of a downer that sounds to me.

KATRINA MADEWELL:  Ok, well, I have some good news because we are going to give away that family 4 pack of tickets to caller number 10.

PAT GEORGE:  I can’t even win that.

KATRINA MADEWELL:  Caller 10 caller 10.

DARRIN T. MISH:  Caller 10 at 888-404-1010, 888-404-1010.

KATRINA MADEWELL:  Talk to Pat George back there, he’s going to count you guy’s 1,2,3,4,5,6,7,8,9 and number 10 is going to get the family 4 pack of tickets to the St. Petersburg bowl giveaway for Mississippi State versus Miami of Ohio 888-404-1010 he’s back there taking your calls number 10. 888-404-1010.  Yuck I just licked the microphone, yuck.  I was a little to close trying to turn and look at Darrin.

PAT GEORGE:  Oh, don’t worry about that, Mason does that all the time.

DARRIN T. MISH:  Same mic right?  So, anyway we are talking about the offer in compromise program and why it’s a good time to go ahead and strike while the iron is hot before the law might, may change  we don’t know but it may very well change.  I, for one, hope it doesn’t it makes my job easier and I’m all about you know getting great results and helping people change their lives with easy, relatively easily.  So there’s another kind of offer in compromise that we haven’t talked about we’ve been talking about what’s called a lump sum offer, a lump sum offer is payable within 5 months of acceptance of the, of the offer so it’s basically a cash offer right, offer might take 6 months to a year they say yes, they accept the offer then they have 5 months to pay.  Now there is another kind of offer called a short term deferred offer. Kind of a dumb name, but it’s basically a 24-month payoff but there is a cost associated with paying out your payments in 24 months…

KATRINA MADEWELL:  What does that mean it costs you more?

DARRIN T. MISH:  It costs you more.

KATRINA MADEWELL:  Of course it does.

DARRIN T. MISH:  So, the formula changes from monthly disposable income times 12 plus assets to monthly disposable income times 24 plus assets so what’s that mean it doubles.

KATRINA MADEWELL:  Ouch, that’s not fair.

DARRIN T. MISH:  It doubles now. Here’s what’s never made sense to me and I will make sense of it here for you in a second, but here’s what makes no sense to me.  If you’re, if the cash offer is a hundred dollars times 12 that’s $1200 and then the short term deferred is a hundred dollars times 24 is $2400 so a hundred dollars a month over 24 months…

PAT GEORGE:  Can we tell everyone that we have a winner so the phones will stop ringing?

KATRINA MADEWELL:  We have a winner! Let’s say hello to our winner who’s our winner Pat?

PAT GEORGE:  His name is Andy. Would you like to talk to Andy?

KATRINA MADEWELL:  We would like to talk to Andy.  Hi, Andy, welcome to the show.

Andy:  Thank you so much.

KATRINA MADEWELL:  How’s it going today?

Andy:  It’s going fantastic.

KATRINA MADEWELL:  Thanks for listening to the show we appreciate you.

DARRIN T. MISH:  You are going to have a great time man.

Andy:  Yeah we are very excited.

DARRIN T. MISH:  While you are at the game you have to promise you know…

KATRINA MADEWELL:  Tag Darrin Mish.

DARRIN T. MISH:  Raise the adult beverage of your choice and cheer for me, not for me, you cheer for your team but have fun.

PAT GEORGE:  Well, wait, who is he cheering for?

DARRIN T. MISH:  Yeah, who are you going to cheer for?

Andy:  Well I’m going to cheer for the Redhawks.

DARRIN T. MISH:  You are going to have to help us we are all looking at each other. Is that Miami?

KATRINA MADEWELL:  I don’t even follow College bowl so help me out.

Andy:  Yeah that’s Miami.  I’m from Ohio originally.

DARRIN T. MISH:  Ok, cool.

KATRINA MADEWELL:  Oh, there you go.

DARRIN T. MISH:  Like the rest of us stayed in Florida right?

Andy:  Yeah correct.

KATRINA MADEWELL:  Well my family was originally from Ohio my mom was born there in Columbus.

DARRIN T. MISH:  You know I 75 goes to Ohio right…

KATRINA MADEWELL:  It does.

DARRIN T. MISH:  It goes to Michigan to…but.

Andy:  That’s right.  Yeah, but we don’t talk about that, though.

PAT GEORGE:  Don’t hang up Andy cause I don’t have all of your information.

KATRINA MADEWELL:  Thank you, yeah thank you for listening. Don’t hang up, Pat George is going to grab you and we are going to be giving away another 4 pack of tickets tomorrow on Tampa Home talk so tell your friends to listen in and thank you for joining us for the show and thanks for listening Andy hold on.

Andy:  Excellent. Merry Christmas.

DARRIN T. MISH:  Andy, she almost..

KATRINA MADEWELL:  Almost hung up on you.

DARRIN T. MISH:  If you heard me grunt, she had her finger on the hang up button so I just saved Andy so now he has to raise his adult beverage of choice and just be grateful he didn’t get hung up on.

KATRINA MADEWELL: It totally would have been an accident well we had you, we had you covered.

DARRIN T. MISH:  So, anyway, we are going back to the offer in compromise, this problem has blown up my show here.

KATRINA MADEWELL:  I know, I’m sorry.

DARRIN T. MISH:  So, anyway, there is a short term deferred option that’s actually double. If you can’t afford to pay $1200 over 5 months, how does it make sense that you could afford to pay $2400 over 24 months?  I guess it kind of makes a little bit of sense, but it’s not really my favorite. I don’t do a lot of short term deferred offers, but I will tell you when it does make sense…

KATRINA MADEWELL:  So, in the mean time you are telling people save, save, save because we are going to be writing a check kind of thing or we are going to be selling some stuff?

DARRIN T. MISH:  Yeah, I will tell you how it does make sense to do the short term deferred offer and this is when it comes in where you have no monthly disposable income but you’ve got some assets and the value of the assets compromised with the offer amount. That is when we do the switch-a-roo at the end. We go hey, you know I filed this as a cash offer but I don’t really want a cash offer, I want a short term referred offer so I can pay this out in 24 monthly equal you know monthly installments and that usually works so let me get the hypothetical there…

KATRINA MADEWELL:  So, you get the lower amount but you have 24 months to pay it is that what you are saying?

DARRIN T. MISH:  Well, let me give you an example, so let’s say you had $5000 worth of assets and you have two choices now you have no monthly disposable income or slightly negative in disposable income so that doesn’t add anything, but you have $5000 of asset, you have 2 choices. Cash offer pay that $5000 in 5 months or you can do a short term offer and we can pay that $5000 out over 24 months no penalties, no interest and then it actually makes sense right?  So there are probably people listening saying well if they’ve got $5000 in assets why don’t they just pay the IRS the $5000?  Well, its usually not in cash, it’s usually not a liquid asset it’s like the value…

KATRINA MADEWELL:  Something they have to sell?

DARRIN T. MISH:  It’s the equity in the house it’s the equity in the car…

KATRINA MADEWELL:  Which by the way if you have an IRS lien it’s not going to be very easy to get the equity out of that house..

DARRIN T. MISH:  No, it’s going to be right now I would say it’s pretty well impossible.

KATRINA MADEWELL:  Well, the people that are going to lend you money is going to be way more then what you pay the IRS in interest.

DARRIN T. MISH:  If you could even find those people who would be willing to lend you money because those guys are like leg breaker kind of people.

KATRINA MADEWELL:  Alright, so you never answered my question with…

DARRIN T. MISH:  It was such a long convoluted question..

KATRINA MADEWELL:  How is it fair to somebody like me that pays taxes on time compared to someone that strolls in after not paying taxes for 5 years that owe a hundred grand to the IRS and you are going to get the sucker settled for 5 grand.

DARRIN T. MISH:  Ok, so that’s a criticism that I got yesterday on Social Media is people were roasting me for how’s that fair I pay my taxes that kind of thing.  Well, we don’t have debtors prison in the United States never have. So somebody yesterday said I think your client should go to prison, ok well that’s…

KATRINA MADEWELL:  That’s your opinion.

DARRIN T. MISH:  Yeah, that’s great, but that’s not how we do things here in this country you don’t go to prison for owing money by and large.

KATRINA MADEWELL:  A lot of people would move out in droves if that happened.

DARRIN T. MISH:  I can tell you that I have gone through times in my life when I was deep, deep, in debt and I am glad that debtors prisons are not around.

KATRINA MADEWELL:  Exactly.  And if they listened to the show to they would know that we talk about this a lot the whole IRS’s purpose is to get them back into the system so that they can start paying.

DARRIN T. MISH:  Exactly, exactly so the whole offer in compromise system is designed to take people who are not ever going to be able to pay ok and get something out of them, get them back into the system so that they can become tax paying you know productive members of society.

KATRINA MADEWELL:  And that makes sense if it’s the same thing if you have a collection they are going to take something over nothing especially if it’s getting ready to be wiped out, they’ve already written it off as bad debt, they want to get something.

DARRIN T. MISH:  And remember there’s a statute of limitations on tax debt it’s 10 years.  So it’s 10 years from the date of the assessment so if I file an offer in compromise and let’s say a guy in our example owes a hundred grand but there’s 3 years left on the statute. It’s not like they have forever to collect this hundred grand. I mean there is a finite amount of time it’s, in my example, it’s 36 months and where are they going to get a hundred grand in 36 months from somebody that I can prove to them is broke.  That is why it’s fair, that’s why, the numbers, especially if you follow me on Social Media, I post these stories and sometimes the numbers just look fake, I can promise you they are not but the reason, here’s the big secret, this was tax debt that was never going to be paid. The IRS is never going to get it, the only thing that I facilitated was settling it faster, that’s pretty much the bottom line, settling it faster so people can get on with their lives so that they can you know get back in the system and live a productive life.

KATRINA MADEWELL:  Would it be safe to say that some of the people that encounter this that actually owe this were tax payers at one point and something happened?  I mean isn’t that…

DARRIN T. MISH:  A hundred percent of them were tax payers pretty much, yeah.

KATRINA MADEWELL:  But I’m saying but not even like that like let’s say somebody made really good income and something happened like let’s say for example the housing collapse right there was a lot of agents that had to go get jobs doing other things because they couldn’t make ends meet so for somebody like just in that example is it safe to say that those are a lot of those people and something happened either traumatic, personal, business or otherwise that cause them to not pay that tax debt.

DARRIN T. MISH:  Very few of my clients are people who made a conscious decision, hey, I’m not going to file my taxes. I’m not going to pay taxes. I mean I do have some people like that ok, but the vast majority of the people that I help and represent are people, good people who either made a bad decision you know where they borrowed from the 401k to go on vacation or something crazy like that or they are good people who just had an economic situation come up that they couldn’t foresee or the didn’t adequately plan for.  I represent tons of former real estate agents, heck I represent tons of current real estate agents but I represent…

KATRINA MADEWELL:  I just gave you the name and the number of a real estate agent in Seattle, she says it’s for a client, but who knows.

DARRIN T. MISH:  Well, you know, I represent tons and tons of real estate investors too and one of the interesting things about the job, and there’s lots, but one of the interesting things about the job is you can see, you can see the news in the consultation room and here is what I mean by that. You will see that there’s a, you can kind of see that the economy is going down like when it did. I was reading in the news that the economy was going down, my personal economy wasn’t changing but then people started coming in and telling me these stories that were you know, that matched what I had been reading in the news that they’re, you know houses were under water, they were, they lost their homes and things like that and I’m not saying that’s interesting I’m just saying that you can see reality and you know…

KATRINA MADEWELL:  Face to face.

DARRIN T. MISH:  Yeah, you could see it in the room and  I try to learn something from every client and so that is another thing that I really like about the business.

KATRINA MADEWELL: So, it’s, I mean, going back to your haters on Facebook, it’s a good thing that everybody doesn’t have an opinion that they should just go to prison because there would be no one to help people like that and you see their story like you are bound by attorney client privilege so you really, we only share a fraction in general of what happens to Mr. and Mrs. no name which I don’t even know the name of the people….

DARRIN T. MISH:  No, absolutely not…

KATRINA MADEWELL:  But the point is you see these people face to face, eye to eye you are rubbing shoulders with them, you hear their stories, you see that they can’t sleep you see them crying in your office so of course they are going to have a different opinion because they don’t see what you see.

DARRIN T. MISH:  I would say over 50% of the people that when I walk out to see them in the waiting room they, you can see the anxiety that they are you know feeling, you can see it exhibited in there body language, I mean I can tell when somebody is not comfortable when I walk out to greet them and one of my big goals is to make sure that we deal with that before they leave the office I want them in a different state because that states a bad place to be it’s not, it’s not fun.

KATRINA MADEWELL:  Well, it’s probably very intimidating. They owe all this money and then they are going to go meet this attorney which is a second intimidation. Then they meet you so they are like, ok, it’s all better now.  Alright so Andy congratulations on winning the tickets.

DARRIN T. MISH:  It’s going to be fun for Andy.

KATRINA MADEWELL:  Yes, and we are going to be giving away 4 more tomorrow, so stick around, we are streaming live.  I forget where I’m streaming live, maybe my page I forget. But we will post it on the IRS Solution Attorney page. We will be back in just a minute and we’ve got a great train wreck coming up for you this week back in a moment.

(commercial break)

KATRINA MADEWELL:  Yeah, did you see that little red button pop up in the Facebook live stream? Pat George got me.

DARRIN T. MISH:  Welcome back to the IRS Solution Attorney show…

PAT GEORGE:  Who is singing this song Katrina?

KATRINA MADEWELL:  I don’t know wait, I don’t know?

PAT GEORGE:  Who do you think, Darrin?

KATRINA MADEWELL:  Elvis?

DARRIN T. MISH:  Yeah, that’s Elvis, yeah?

PAT GEORGE:  Yes.

KATRINA MADEWELL:  I was right?

DARRIN T. MISH:  We are not old enough to remember Elvis too well.

PAT GEORGE:  Apparently, we can’t remember even Elvis.

KATRINA MADEWELL:  It sounded like him, but you know, wasn’t sure. A minute before my time.

PAT GEORGE:  You can’t live by Mariah Carey alone.

KATRINA MADEWELL:  Now that we’ve totally blown your whole show, Darrin, about your offer in compromise…

DARRIN T. MISH:  It’s been fun.

KATRINA MADEWELL:  What’s the meat and the potatoes that you want to get to.

DARRIN T. MISH:  So, the meat and potatoes is, now is the good time to file an offer in compromise.  Remember, they take somewhere between 6-12 months for the IRS to work them right so, so there is a couple of hitches you’ve got to, if you are self-employed you have to be caught up with your estimated tax payments and that’s something that we talk about on the show quite a lot.

KATRINA MADEWELL:  Quarterly, monthly payments, right?

DARRIN T. MISH:  The quarterly payments you have to be caught up on those.  So, if you are at this time of the year that can be pretty hard, what if you are supposed to be making thousand dollar a month or a three thousand dollar a quarter estimated tax payments and we are in December.

KATRINA MADEWELL:  When you say caught up, like can you just start.

DARRIN T. MISH:  The IRS wants you to be complete. They want you to be current to that date in the year.

KATRINA MADEWELL:  How far back like all the way back?

DARRIN T. MISH:  For the whole year so if you are in December…

KATRINA MADEWELL:  Wait till next year?

DARRIN T. MISH:  Yeah, you have to wait till next year and that’s the bottom line you are going to have to wait till January to make a payment so now you are current with 2017..

KATRINA MADEWELL:  That’s so crazy.

DARRIN T. MISH:  Throw 2016 on top of the other tax debt that you owe and…

KATRINA MADEWELL:  So, like are you telling your clients like by the way save your money or be prepared to sell something cause you may have to lay down a chunk.

DARRIN T. MISH:  That’s interesting here’s the problem with the system if I tell them to save their money well that money is in the bank right?

KATRINA MADEWELL:  Yes that is why I was asking the question.

DARRIN T. MISH:  If that money is in the bank didn’t that get added as an asset?

KATRINA MADEWELL:  Don’t they look at it at the time that you fill it out?

DARRIN T. MISH:  No, well they do it’s the time you fill it out and then they get to working on it in 6 to 12 months they look at everything again.

KATRINA MADEWELL:  Ok, ok so my balance today is going to be different then it is 6-12 months from now.

DARRIN T. MISH:  Of course, it’s going to be the same for everyone it’s going to be different even if you have a job and you have fairly steady income it’s going to be different.

KATRINA MADEWELL:  Alright, so what’s the plan stock pile cash like what are you telling them?

DARRIN T. MISH:  What I do so often, it’s on my offers, on every offer that I file, is it says my taxpayer is going to borrow from friends or family upon acceptance of the offer so that’s one of the many reasons why we make really low offers like I offer 500 bucks all the time and it doesn’t work in every case and I’m not saying that it works in every case but I do a lot of low offers because you have to put 20% down of the offer amount so 20% down of $500 is a hundred bucks.

KATRINA MADEWELL:  Do they ever ask for a paper trail like I want to see this check from mom or dad?

DARRIN T. MISH:  And then you have to pay a $186.00 filing fee.  No, in terms of source of funds for payment no.

KATRINA MADEWELL:  See we are used to tracking everything down in my world, that’s why I am asking.

DARRIN T. MISH:  So, in my world if you get to the acceptance point, it’s don’t ask, don’t tell. I swear to goodness that it is, it’s don’t ask, don’t tell. They don’t know where the money is coming from and they don’t ask other than that you know that one part of the form that says where are you going to get the money, I’m going to borrow it from friends or family and they are like ok that is what we are going to do.

KATRINA MADEWELL:  So, how long do you think we have before this thing starts ticking away like how much longer do you think we have before these rules change and the amounts change?

DARRIN T. MISH:  I would say we’ve got a year or two, what I don’t know is if the rules change mid-stream…

KATRINA MADEWELL:  Or they will be retroactive?

DARRIN T. MISH:  I betcha it’s not.  That’s really unfair, that’s really unfair I don’t know.

KATRINA MADEWELL:  We saw the train coming.

DARRIN T. MISH:  So it’s about that time…

PAT GEORGE:  At least you were watching.

DARRIN T. MISH:  It’s about that time it’s time for the IRS train wreck of the week.

KATRINA MADEWELL:  Katrina got run over by Darrin’s train wreck of the week.

DARRIN T. MISH:  This is the segment of the show where we talk about someone who came into the office and they were something of a train wreck and they left and it’s always a happy ending.  So in this particular story I’ve told this story before but it’s so great I have to tell it again because it just got finalized this week.  I had a client who is an elderly gentleman I think he is in his 70’s and so the reason, somebody asked me why is that relevant, a hater actually asked me yesterday why is that relevant that he is elderly?  Well let me explain for the slower people in the room why it’s relevant, if the person is elderly what are the chances that their income is going to be sufficient to pay off the 2.2 million dollars that this particular client owed?

KATRINA MADEWELL:  They are not in their earning years.

DARRIN T. MISH:  Exactly so it’s going to taper off, there health is naturally going to taper off, their life expectancy is naturally lower…

KATRINA MADEWELL:  Health care expenses are higher.

DARRIN T. MISH:  Exactly they’re entering the retirement phase, that’s why it’s relevant. So this particular gentleman used to own a business of some size and ended up racking up over 2.2 million dollars in tax debt, I think 1.6 million or so was unpaid payroll tax isn’t that good?

KATRINA MADEWELL:  Oh my gosh, that makes me want to throw up.

DARRIN T. MISH:  Not good and I think the other 5 or 6 hundred thousand was income tax from a variety of years. This guy was in a whole lot of trouble. At the time, I got this case about 3 years ago. This is one of the bigger tax debt liabilities that I have ever handled and I was really excited about getting this case because it is such a big number and…

KATRINA MADEWELL:  You are either excited or intimidated by that number.

DARRIN T. MISH:  Yeah, well, this job can get a little bit mundane at times, so if there is something unusual or a little bit more challenging I tend to gravitate towards that. So I took this case about 3 years ago and when I did the math…and that’s why I wanted to be so grandiose today…when we did the math this came out to a $754.00 offer so on 2.2 million dollars so I was like let’s try it, offered $754.00, about 8 or 10 or 12 months went by and I got a call from the offer specialist that I hope is listening down in South Florida area and he basically said I’m mad at you. Darrin and I laughed, I really did I laughed so why are you mad at me, he says $754.00 on 2.2 million, let me tell you mister, there is no way we are going to take that offer…

KATRINA MADEWELL:  What’s the matter with you?

DARRIN T. MISH:  And I laughed and laughed some more and I said let me tell you why we did that. Number 1 that is what the math came out to, and number 2, 20% down payment of 754 bucks is a lot less than a bigger number, and number 3, I know we are going up from there so let’s start this party let’s start this and so he and I worked out a deal to where it was going to settle for 25 grand, really good deal, client was happy with it…

KATRINA MADEWELL:  Yeah for 2.2 million that’s a deal.

DARRIN T. MISH:  In cases this big, they have to go through a review process with IRS council, IRS council looks at this and bounces it and says no way to good a deal, bounces it so we appeal and in the appeal we offered 50 grand so we doubled right, we’ve doubled it, we go through IRS appeals and we hummed and hawed, argued with these guys for like forever. Finally, it just came through yesterday accepted at 50 grand. I think somebody did the math, somebody who was mad on Facebook did the math and that’s like 2%, like 2 pennies on the dollar, but you know 50 grands is not a tiny number, especially from a guy that has no assets and he’s 70 something years old. I, for one, as a tax payer, I’m happy that the government got 50 grand then what they were gonna get, they were gonna get was nothing that’s what they were gonna get.

KATRINA MADEWELL:  And that may be an incentive for him to even start another business even at his age.

DARRIN T. MISH:  I have a feeling, he is a go getter, ok, even though he is in his 70’s he’s a go getter and I have a feeling that’s probably what he is going to do. He couldn’t have done that he could not have been another productive tax payer member of society if he didn’t get this monkey off his back. So, I’m really happy for him it was been one of my most challenging cases but it was one of the most fun as well.

KATRINA MADEWELL:  I think that some of the people that you are getting feedback from and criticism from you know either A.  have a tax issue themselves or B.  Had one at some point probably in the past and where irritated that you didn’t, they didn’t get the same results.

DARRIN T. MISH:  So that Taylor Swift song comes to mind…

KATRINA MADEWELL:  Me too. Haters gonna hate, hey, Pat come on get with, it get off the…

DARRIN T. MISH:  I enjoy the criticism, it helps me educate people and that’s the spirit of this entire show today.

KATRINA MADEWELL:  Thanks for joining us, we’ve got to go.  I will be back tomorrow with Tampa Home Talk. We are out.

Share on Facebook0Share on LinkedIn0Pin on Pinterest0Tweet about this on TwitterShare on Google+0