I was thinking of invoking the “effective tax administration” clause of the Offer in Compromise program, with regards to my back tax bill, because I’ve spent the last few years caring for my elderly parents. Is this a good idea?

Probably not. The fact is the IRS approves very few “effective tax administration” claims, for the simple reason that this provision of the Offer in Compromise program is meant to apply to only the most severe, extraordinary, life-and-death situations in which it would be cruel and unusual for the government to demand full payment of a tax bill.

For example, if you are mortally ill with stage 4 cancer and have only a few weeks or months to live, that might rise to the standard of an effective tax administration claim. But, if you simply are dealing with the stresses of ordinary life, the IRS will not be interested in hearing your case.

Is this fair? Probably not. Given the demographics of the U.S., though, there are literally millions of middle-aged taxpayers who currently are caring for one or both elderly parents, which often entails making significant financial compromises. This is painful, stressful, and inconvenient, but it simply doesn’t rise to the standard of effective tax administration. A better strategy in your case would be to invoke the “doubt as to collectability” clause of the Offer in Compromise program, though even this is far from a sure bet—and will entail laying your soul (and your finances) bare to the IRS.

You simply will be wasting your, and the government’s, time if you file an effective tax administration claim when you are not in a life-and-death situation. You also might annoy your IRS revenue officer, who will be less likely to cut you a deal. Questions? Call the Oklahoma tax experts at Travis W. Watkins, PC (800-721-7054) to find out what we can do for you!