JK Harris and Company, Creating Lifetime Clients

Christy Pepper, Director of Primary Tax Services

If you have ever tried to buy a house, then you know what it’s like to supply a stranger with all of your personal documents – and lots of them. A bank is not going to loan you thousands of dollars without verifying that your income is what you say it is, that your bills are what you say they are, and your assets are worth what they appear to be on paper. The IRS is not going to accept an Offer in Compromise unless you prove that your income is what you say it is, that your expenses are what you say they are and your assets are worth what they appear to be worth based on a Quick Sale Value asset.

The documentation you need to buy a house and the documentation you need to negotiate an acceptable OIC is very similar in nature. The main difference is, you only have to provide the documentation ONE TIME to your mortgage broker. The IRS requires that you provide this documentation continuously. A lot of clients get so overwhelmed and frustrated when we ask for copies of their household expenses and proof of their income that they sometimes give up. Some may think that we lose their documents because we ask for them over and over again. Unfortunately, this is an IRS requirement and it’s just as frustrating for our tax team as it is for the taxpayers to keep up with supporting documents that are required. If you want to file an OIC, make sure you always have the most current 3-months of the following documents:

• Proof of gross earnings and deductions from each employer or payor.
• Proof of pension, social security, child support, rental, or other income
• Bank Statements for all accounts, showing all account and routing numbers
• Documents proving the current value of, loan amount, and monthly contribution toward all investment accounts
• Statement from life insurance company showing the type, cash value, loan amount (if any), and monthly contribution amount.
• Description of each vehicle owned.
• Description of each piece of property owned.
• Brief description and estimated value of significant household assets.
• Proof of ALL household expenses.
• A brief statement regarding: (1) how you incurred your tax debt; (2) your education, overall health, and work experience; (3) an explanation as to where you will obtain the funds necessary to resolve your tax debt.
• List of all credit accounts, showing credit limit, amount owed, and monthly payment(s)
• Copy of most recent tax return including all schedules and supporting documents
• Other documents as requested by the IRS

Does that sound like a lot? Do you have the last 3 months of all of those documents stored away neatly in an area in your home? Probably not, because most people do not keep copies of all of their household expenses. However, the IRS requires this information and they will ask for it repeatedly in order to maintain a current view of your household finances. Be prepared, be organized, and be timely when asked to provide this information. Yes, it is tedious and can be frustrating, but the final outcome of resolving your tax debt will make it all worth it in the end!

Christy is the Director for JK Harris’ Primary Tax Services. She oversees nine divisional teams and is responsible for monitoring and maintaining the quality of client services, unit production, and all practices and procedures. She started with JK Harris in 1998 as a Case Specialist.