RONALD J. CAPPUCCIO, JD, LLM (TAX)


TAX, BUSINESS AND ESTATE ATTORNEY

QUESTIONS
856.665.2121

Offer in Compromise to Reduce Taxes Owed to the IRS - Frequently Asked Questions

Giving Away Assets and an IRS Offer In Compromise

Question: 3 years ago I transferred the deed to my house to my wife. I also let her withdraw money from our joint accounts and put them in her own name. I owe the IRS taxes for the last 2 years. Can I do an Offer In Compromise?

Answer: The IRS gives an OIC for 3 reasons:

  1. Doubt as to liability; or
  2. Inability to Pay; or
  3. Special reasons favorable to the government.

Since your argument is doubt concerning the ability to pay, the IRS demands you complete a 433A Collection Information Statement. Line 16 of the 433A requires you to disclose ANY ASSETS transferred for less than full value within the past 10 years. The IRS calls these Dissipated Assets. The government closely looks at the transaction for when it was transferred in relation to when the Offer was submitted, how it was transferred, and the value of the assets versus how much was received.

In this case, the IRS would include the dissipated assets in your gross estate and require you to pay as if you still held them.