Combatting an Unsuccessful Offer in Compromise

Let me ask you a question. If a client hires you to do an Offer in Compromise and you're not successful should you give the client their money back?

Well, let me ask you this question. If you hired an attorney in a civil or God forbid a criminal matter, and your case went to a jury and the jury sided in the favor of the Plaintiff, doesn't the attorney get paid regardless? Of course he does. Well, it's the same here. And a well-crafted engagement letter will combat any type of refund that the client thinks they're entitled to.

For example, in my engagement letter, I always put in option 2, or Plan B. If somebody hired me for an Offer in Compromise my engagement letter stated the Offer in Compromise paragraph, and right underneath that, OR, in big bold letters. The 2 letters, the word OR - e.g. "OR a properly structured Installment Agreement and a Penalty Abatement." This way I was covered because if I couldn't get the Offer in Compromise accepted, at least I can negotiate a properly structured Installment Agreement and couple that with a Penalty Abatement.

At the end of the day, the IRS is the final arbiter. They have the final word. Even if you've been very, very successful with Offers in Compromise and you have a high acceptance rate, but the OIC didn't go through for whatever reason, you do not have to refund any money back to the client. You've earned your fee by representing that client and getting them a permanent resolution. It may not have been an Offer in Compromise, but it's an Installment Agreement that they can live with, and also you attempted to get some penalties abated.

So in the initial consultation when you go over the client's duties, you also go over a well-crafted engagement letter. In the letter, you specifically say that the IRS has the last word. There's no guarantee, and there is no guarantee in this industry, there is no guarantee in this work. Please don't guarantee anybody you're going to get a certain resolution for them because that's a recipe for disaster.

Until next time,

michael rozbruch tax and business solutions academy