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Ask The Taxman: I Was Wondering If Overtime Is Considered In An Offer In Compromise?

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Ask The Taxman:  I Was Wondering If Overtime Is Considered In An Offer In Compromise?

Ask The Taxman:  I Was Wondering If Overtime Is Considered In An Offer In Compromise?

Question:

I have been doing some overtime recently but it is temporary, until we catch up at work.  Will the overtime be considered in my Offer in Compromise?

Answer:

There are two parts to this question and it all depends upon

  1. Has the Offer In Compromise already been submitted? 
  2. For how many pay periods have you received overtime?

 

If you have already submitted your Offer In Compromise, it’s important to understand this is a long process.  Typically, it will not even be assigned to someone (Offer Examiner) for review until 120 days have passed since you filed the Offer.  Once someone is assigned, you may be asked to provide updated information, such as bank statements and pay stubs.  If the overtime is listed on any of these paystubs, you would need to inform the Offer Examiner of this extra income.  At this point, we would suggest gathering as many pay stubs as possible to show the overtime is temporary and not part of your ordinary income. 

If you have not submitted the Offer In Compromise and still preparing the information, you will need to provide pay stubs as support with the Offer.  Again, we would suggest gathering as many as possible to show this is not part of your ordinary income and should not be considered.  Also, it’s a good idea to prepare an enclosure letter with your Offer and notate in the income section that overtime was only for X amount and for X amount of pay periods.

In the end, do not omit the information from your Offer.  For example, you file an Offer in November 2015 and an Offer Examiner is assigned in May 2016.  At this point, they can review your recently filed tax return and clearly see your income.  They may ask that you verify your income and could request copies of pay stubs.  If you omitted the information, the Offer Examiner could believe you are hiding other assets or income.  Remember, the burden of proof falls on the taxpayer; which is why we recommend hiring a professional.

We deal with The Offers in Compromise Program daily. That’s our job as we are the Rescue Squad for Overtaxed and Troubled Taxpayers. Give us a call at 800-829-7483 and let us run that analysis.

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