Taxpayers who owe more taxes than they can pay may seek an Offer in Compromise (OIC) with the IRS to settle the debt for less than the amount owed. In one case, the IRS rejected a taxpayer’s request for an OIC and proceeded to collect his outstanding liabilities. After performing a financial analysis, the IRS settlement officer (SO) determined he had income far exceeding the amount of his offer. The taxpayer argued that the SO had wrongly disallowed his housing expense and credit card debt. His argument was rejected by the U.S. Tax Court, partly because he admitted that the credit card debt hadn’t been incurred to pay basic living expenses. (TC Memo 2022-5)
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