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‘No deal’ in new case

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in Small Business Tax

Usually, the IRS will stick to its guns on its calculation of the reasonable collection potential (RCP).

New case: A commercial insurance broker owed about $100,000 in payroll taxes. Eventually, the broker offered to settle the matter with an offer in compromise by paying just $3,000. To support her position, she provided documentation for housing costs of $6,964 per month and vehicle costs of $1,617 per month, including a $1,200 monthly lease for a Lexus.

The IRS rejected the offer because it was less than its calculated RCP of $175,000. The taxpayer took her case to court. But the Tax Court wouldn’t deviate from the usual IRS standards, because the broker couldn’t prove that such deviation was justified. Result: No deal. (Lloyd, TC Memo 2017-60, 4/10/17)

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