Taxpayers who own their own homes may have equity. Although the IRS will generally not require a taxpayer to sell the home, the agency may require a taxpayer to obtain a bank letter denying a mortgage on the home. Thus, a client who has equity in a home but whose income is too limited to get a mortgage may still be eligible for an OIC.
The IRS will generally allow a taxpayer to have one vehicle for personal use unless it is an especially valuable vehicle with a lot of equity.
A taxpayer may also have whole life insurance, savings, or a pension that could satisfy the tax liability. If the attorney can show that these funds are needed to pay future living expenses, the taxpayer may be able to keep these assets and still be approved for an OIC. The attorney will have to show that the taxpayer’s income is insufficient to pay for basic expenses, that this situation is permanent, and that the asset is needed to offset the negative income for the remainder of the taxpayer’s life. Use the Social Security life expectancy charts when making this argument. These charts can be found online at the Social Security website.