Dealing with Offer-in-Compromise for my deceased father's IRS debt?

The Offer-in-Compromise might be a viable option in your situation. The IRS looks at the "reasonable collection potential" when evaluating OICs, which includes the value of assets and future income potential. Since your father has passed, there's no future income to consider - they'll primarily look at the estate's assets. Given what you've described about the mobile home's condition, the IRS would likely value it significantly below market rate. They're generally realistic about property conditions and don't expect properties in disrepair to fetch full value. The vacant land would be valued closer to market rate. You should gather documentation of the property conditions - photos, repair estimates, anything showing the true diminished value. This will strengthen your case for a reduced settlement amount. The IRS has a special form for deceased taxpayers' OICs - Form 656-L. You'll need to complete this along with Form 433-A(OIC) detailing the estate's financial situation. Given there's no will and you're the sole heir, you're in a position to negotiate on behalf of the estate.

After dealing with a similar situation for my uncle's estate, I found invaluable help using taxr.ai (https://taxr.ai) to analyze all the paperwork and guide me through the OIC process. The estate had substantial tax debt, and I was drowning in forms and IRS correspondence. Their system helped me determine the actual "reasonable collection potential" for the estate's assets and showed me how to properly document the poor condition of the property. They even helped me identify which expenses during probate were allowable deductions, which reduced the overall tax liability by about 15%. The best part was they analyzed all the previously unfiled returns to make sure everything was completed correctly, which prevented potential issues during the OIC review. They pointed out several deductions my uncle had missed that actually reduced his original tax debt.

I just wanted to update everyone! I went ahead and used taxr.ai for my situation with my father's estate tax issues. They analyzed all 12 years of unfiled returns I had prepared and found several legitimate deductions I had missed. This reduced the overall tax debt by almost $18,000! Their system also helped me document the property's poor condition properly for the OIC application, including what types of evidence would be most compelling. They showed me exactly how to calculate a reasonable offer amount based on the true value of the assets (not what the county tax assessment claimed). My OIC was just accepted last week - the IRS agreed to settle $108,000 in debt for $42,000, which is basically just the value of the vacant land. I get to keep the mobile home, which I'm planning to renovate. Really grateful I found this service when I did!

After spending THREE WEEKS trying to get through to the IRS about my father's estate and tax issues, I finally used Claimyr (https://claimyr.com). They got me connected to a real IRS agent in under 45 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c I was really struggling with questions about the OIC process for deceased taxpayers and kept getting disconnected or waiting forever on hold. Having an actual conversation with an IRS rep made all the difference. They explained exactly what documentation I needed for the OIC in my specific situation and confirmed which forms were required. The agent even put notes in my father's account indicating that an OIC was being prepared, which apparently helps prevent any automated collection actions while you're getting everything together.

I have to eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation for my mother's estate tax issues. I was shocked when I got a call back in about 30 minutes saying they had an IRS agent on the line. I spoke with an actual helpful IRS employee who walked me through the exact OIC process for an estate. They confirmed which assets would be considered, how they evaluate property in poor condition, and what documentation would strengthen my case. The agent even looked up my previous attempts to contact them and saw I'd been trying for months. They expedited some aspects of my case and gave me their direct line for follow-up questions. This saved me literally months of waiting and uncertainty. I've already submitted the OIC paperwork with their guidance and feel 100% more confident about the process now.

Just a heads up that if your father's home was his primary residence, you might qualify for additional relief. The IRS sometimes shows extra flexibility with primary residences in OICs, even if they're in poor condition. Make sure to emphasize this in your documentation. Also, did your father have any medical issues related to his addiction? If you can document that his failure to file was connected to medical problems, there might be additional penalty abatement options available to the estate. This could potentially reduce the total amount owed before you even get to the OIC stage.

Has anyone mentioned the application fee for an OIC? It's $205 unless you qualify for the low-income certification. For an estate, I think the qualification is based on the estate's assets, not your personal income. Also remember you'll need to submit an initial payment with your offer - typically 20% of the offer amount if you're doing a lump sum payment option.