When you and your Oklahoma tax lawyer negotiate with the government for an Offer in Compromise (OIC), the IRS will take into account your projected future earnings when calculating how much of your tax debt you can pay within that time period. Until very recently, these projections went fairly far out into the future: four years of projected income if you agreed to settle your bill in less than five months, and five years of projected income if you planned to pay off your IOC in six months to two years.
However, in May 2012, the IRS instituted a major change as part of its “Fresh Start” program: now, the government will only weigh one year of future projected income if you plan to pay your IOC within five months, and two years if you plan to pay within six months to two years.
Why the change? Well, as any economist will tell you, it's easy to be excessively optimistic when making predictions; that's why most state pension funds foolishly predict interest earnings as high as eight percent a year, when a more realistic estimate might be one or two percent. Basically, the IRS is admitting that projecting income past a year or two is an impossible venture, and that it's unfair to a taxpayer buried in debt (especially since, in this economy, an individual can lose a job just as quickly as he finds one).
Are you considering negotiating an Offer in Compromise with the IRS? Whether you plan to take advantage of the Fresh Start program, you need to hire an experienced tax lawyer to guide you through the process. Call the Oklahoma tax attorneys at Travis W. Watkins, PC (800-721-7054) for a free consultation today!