Good Client Story: Joe's OIC

By: Barbara Heggie

Supervising Attorney, Low-Income Taxpayer Project

Joe’s tax liability arose from unpaid federal income tax for the years 2017, 2018, and 2019. During those years, he was romantically involved with a woman, eventually moving in with her. She offered to take care of his finances and paperwork, and he gratefully accepted, conceding his cognitive challenges and lifelong difficulties with such matters. Over time, his trust in her proved to be misplaced, and his guileless generosity mixed badly with his limitations. He agreed to open a joint checking account with her, and then he agreed to deposit all of his retirement funds into it.

 Eventually, the money ran out. She evicted him, and he was left homeless and nearly broke. He didn’t even have a car to sleep in. And because no taxes had been withheld from the retirement fund distributions – and none were paid at tax time –- he incurred a federal income tax liability of almost $40,000. Given his advanced years and poor health, he can’t work any longer, and his sole source of income is under $1,300/month in Social Security retirement benefits.

 Fortunately, Joe turned to a trusted relative for help, who contacted 603 Legal Aid’s Low-Income Taxpayer Project. The tax clinic completed the required forms for an IRS offer in compromise and helped Joe and the family member assemble all the needed documentation. The tax clinic then submitted the package to the IRS, explaining Joe’s circumstances, stating the legal basis for the compromise, and advocating for a settlement of the federal tax liability in an amount Joe could afford -- $50.

 A year later, an IRS offer analyst contacted the tax clinic, asked a few questions, and then agreed to accept the $50 offer, wiping out the rest of Joe’s tax debt.

 Joe and his family member expressed relief and gratitude to 603 Legal Aid: “You have been amazing! I can’t thank you enough!”

If you are a low-income taxpayer facing problems with the IRS, apply for help by calling 603 Legal Aid at 603-224-3333 or apply online.