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The taxpayer's finances and ability to pay

SEE 3 Chapter 14 · IRS outline 2C1, 2C2, 2C3, 2C4, 2C5

Mira and Jon's bakery ran into a bad year and now owes $38,000 of back tax. Before Nadia can ask the IRS for a payment plan or an offer, she has to see the case through the IRS's eyes: what the couple earns, what the IRS will let them spend, what their assets would bring, and whether bankruptcy could wipe any of it out. This chapter teaches the arithmetic of ability to pay, so the collection options in chapters 18 and 19 make sense.

In this chapter

1. Ability to pay and the collection information statement
2. The Collection Financial Standards
3. Equity, disposable income and reasonable collection potential
4. Third-party research: checking values and facts
5. Bankruptcy and tax debts
6. Putting the numbers to work

This chapter has 6 lessons and 50 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Collection information statements
• Collection Financial Standards
• assets, equity and income
• third-party research
• insolvency
• discharge of tax in bankruptcy

Chapter 13: Building the case: issues, risks and documents · Chapter 15: Legal authority and tax research