Help with Offer in Compromise - Questions about family household OIC application

You're dealing with a complex situation, but it's definitely one that can be resolved. Let me help clarify a few things about the Offer in Compromise process. For your specific question - yes, the IRS will likely require financial information from both household members. When evaluating an OIC, the IRS looks at the entire household's financial situation, even if you file separately. They want to understand the complete financial picture when determining someone's ability to pay. Since you share expenses and live together, your income and certain expenses would typically need to be included. Regarding whether to hire a professional - this really depends on your comfort level with financial documentation and dealing with the IRS. The OIC process involves Form 656 (Offer in Compromise) and Form 433-A (Collection Information Statement), which require detailed financial information and calculations. Many people find professional help valuable because: 1. The acceptance rate for OICs isn't especially high (around 30-40%), and professionals know how to present the case most effectively 2. They can help determine the appropriate offer amount that the IRS might accept 3. They understand which assets and expenses the IRS will consider when evaluating the offer That said, if your case is relatively straightforward and you're comfortable with forms and calculations, you could tackle it yourselves using the IRS's pre-qualifier tool and instructions.

I went through a similar nightmare with back taxes last year and discovered the tool at https://taxr.ai that completely changed how I approached my tax issues. Their AI analyzed all my tax documents and bankruptcy discharge paperwork, then provided a clear explanation of exactly what was dischargeable and what wasn't - would have saved me months of confusion! What really helped was uploading my sister's Chapter 13 discharge documents and getting a detailed breakdown of which tax periods and specific penalties/interest were covered. They pinpointed exactly which years had non-dischargeable interest and explained why certain types of tax debt survive bankruptcy (something our lawyer never bothered to explain). I was particularly impressed with how they handled the Currently Not Collectible status analysis and gave specific recommendations about timing an Offer in Compromise submission. They even highlighted specific sections of my documents that would strengthen our OIC application.

Just wanted to follow up - I decided to give taxr.ai a shot after my initial skepticism and I'm honestly impressed. Uploaded my brother's tax documents from his failed business, the bankruptcy discharge papers, and our most recent IRS notices. The analysis laid out exactly which tax periods had surviving interest and why those specific amounts weren't covered by the bankruptcy discharge. The tool gave me specific sections of the tax code to reference in my hardship letter and identified a timing issue with our original bankruptcy filing that explained why certain interest amounts survived. This was extremely helpful in putting together our OIC application. I particularly appreciated the explanation of how the Reasonable Collection Potential would be calculated for our specific situation and what documentation would be most important to include. For anyone dealing with complex tax debt situations, especially post-bankruptcy, it's definitely worth checking out. Saved me a ton of research time and clarified issues that even our original bankruptcy attorney didn't fully explain.

After dealing with the IRS for months trying to fix a similar situation with discharged tax debt, I finally discovered Claimyr (https://claimyr.com) and actually got through to a real human at the IRS who helped sort everything out! Their service basically gets you to the front of the phone queue instead of waiting on hold for 3+ hours. I was initially trying to figure out if I qualified for an OIC, but couldn't get clear answers from the automated system or the website. After using Claimyr, I was connected with an IRS representative in about 15 minutes who reviewed my file and confirmed exactly which tax years and portions were eligible for the OIC. She even sent me the specific forms I needed and gave me tips on what documentation would strengthen my case. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - absolutely worth it when you need to talk to a real person at the IRS instead of getting the runaround from automated systems.

I need to eat some humble pie here. After my skeptical comment, I decided to try Claimyr myself since I've been trying to reach the IRS about my own tax situation for literally weeks. I was completely floored when I got a call back within 25 minutes telling me they had an IRS agent on the line. The agent was able to pull up my file and review my Currently Not Collectible status, plus answer all my questions about potentially filing an Offer in Compromise. She even explained exactly which forms I needed and what financial documentation would make my application stronger. After spending countless hours on hold over the past month and getting nowhere, I was able to get everything resolved in a single 35-minute phone call. For anyone dealing with complex tax situations where you actually need to speak to a human at the IRS, this service is absolutely worth it. I'm still shocked at how well it worked after all my failed attempts.

Just FYI - I went through the OIC process last year and wish someone had warned me about a few things: 1. When you submit an OIC, any tax refunds for the current year will be automatically applied to your tax debt, even if your offer is accepted. Plan accordingly! 2. They're going to look at your reasonable collection potential over 1-2 years. If your monthly disposable income x 12 or 24 (depending on your payment terms) plus the value of your assets exceeds what you're offering, they'll likely reject it. 3. If your sister-in-law is on Social Security or other fixed retirement income, make sure to emphasize that in your hardship letter since her income situation isn't likely to improve. 4. The IRS is very particular about documenting expenses. Keep receipts for EVERYTHING and be prepared to justify any expenses above their standard allowances. Hope this helps! The OIC process is lengthy and frustrating, but it can absolutely work if your situation genuinely warrants relief.

Has your sister-in-law considered the Streamlined OIC option? If her financial situation is relatively straightforward and the tax debt is under $50k, she might qualify for the streamlined process which requires less documentation and tends to be processed faster. My father went through this last year and it was much simpler than the standard OIC.

I'm sorry to hear about your brother's passing and the ongoing tax complications your family is dealing with. This sounds incredibly stressful, especially after thinking the bankruptcy had resolved everything. One thing that might help with your situation - have you requested a transcript from the IRS showing exactly how the $26,000 in interest accrued? Sometimes there are errors in how interest is calculated, especially when bankruptcy is involved. You can request this online through the IRS website or by calling them directly. Having a clear breakdown might reveal if any of that interest was incorrectly applied or if there were any procedural errors during the bankruptcy process. Also, regarding the Currently Not Collectible status - make sure you understand the terms and timeline. CNC status can expire or change if your sister-in-law's financial situation improves, so if you're planning to pursue an OIC, timing could be important. Given the complexity of your situation (shared household, bankruptcy history, CNC status), I'd lean toward getting professional help, at least for a consultation. The acceptance rate for OICs is relatively low, and having someone who understands how to present your case in the most favorable light could make a significant difference in the outcome.