Why the IRS rejected the Offer In Compromise from Wesley Snipes.

Why the IRS rejected an Offer in Compromise of Wesley Snipes.

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Wesley Snipes’ issues with the IRS have been widely documented – from his failure to pay taxes to jail time.  Mr. Snipes recently was given a tax bill of $23.5 million (up from $17.5 million assessed about 2015).

Previously, Mr. Snipes filed for an Offer In Compromise (OIC) where he claimed he couldn’t pay the IRS and offered a lower amount.  The OIC was for $842,061, or about 4 percent of the taxes owed.

The IRS reviewed his OIC and rejected it due to various reasons, as explained in an article from Accounting Today (published 12-13-2018).  The primary issue was ‘dissipated assets’ (assets sold or transferred by Mr. Snipes or his advisors) that should have been included in the asset listing of Mr. Snipes.

Anyone who is thinking of submitting an OIC needs to include all assets that the taxpayer owns.  Homes, cars, artwork, collectibles, business interests, and real property must be included in the OIC.  The IRS reviews the assets listed and will investigate if other assets belonging to the taxpayer are not listed.

One time, I had an OIC reviewer call and asked why a taxpayer didn’t include a boat trailer on the asset lists.  The IRS reviewed vehicle registration records and found the boat trailer under my client’s name.  Turned out that my client had sold the trailer many years before and well before his tax issues arose so this was a non-issue in this particular case.

Do you have questions on Dissipated Assets, an Offer In Compromise or need to file one?  Please send me a message in the form below.

Cheers!

Thomas C. Hodge

Founder, Hodge Group LLC