Business Finance - Accounting Offer in Compromise Writing Assignment Due April 1 (Due in 4 h)

Offer in Compromise Writing Assignment

Due April 1

Seasonal/variable-income household; no real estate; small savings and modest vehicle equity

Facts narrative

Michael and Teresa Campobasso are married. Michael works in hospitality management with seasonally variable overtime; Teresa works in retail. Their prior IRS Form 1040 non-filing arose after several years of erratic withholding, family emergencies, and reliance on extensions that were never completed. They have now filed the five delinquent returns through your CPA firm Ugatu B. Kiddenme & Sons, CPAs and face a combined assessed balance of approximately $60,000.

The couple rents an apartment in Lehigh Acres, has one financed vehicle and one older paid-off F-150, and keeps only a small emergency reserve of under $1,000.

You have been tasked with filing an offer in compromise (Form 656) with a request to abate taxes and penalties due based on doubt as to collectability.

Doubt-as-to-collectibility offer is not simply a request to “reduce the bill to 30% to 40%.” The offered amount generally must at least match the taxpayer’s reasonable collection potential, although the IRS may consider special-circumstances cases separately.

Numerical profile

Average monthly gross income: $5,950 Estimated withholdings / payroll deductions: ($950) Average monthly net income: $5,000

Monthly necessary expenses:

· Rent: $1,575

· Utilities: $325

· Food / housekeeping: $1,050

· Transportation: $775

· Health insurance / medical: $375

· Cell / internet: $175

· Miscellaneous necessary expenses: $725

Total monthly expenses: $5,000 - $500 = $4,500 Monthly remaining income: $500

Assets:

· Checking / savings: $2,800

· 2018 Hyundai Tucson FMV $12,000, loan $10,500, equity $1,500

· 2010 pickup FMV $4,500, no loan, equity $4,500

· No real estate

· No marketable investments

Illustrative net realizable equity: $6,000 Future income component: $500 × 24 = $12,000 Illustrative total collection potential: $18,000

Deliverables:

1. Cover Letter to the IRS Collections – Letter should be addressed to Mailing address on Page 29 of Form 656

2. Completed forms 656 and 433-A (OIC). You can download the Form 656 B and fill in the Form, print and provide with your materials.

3. Form 2848

4. Copy of Application Checklist on page 29 of Form 656 - B

Everything is due April 1