The IRS is all about automating everything as much as possible, which isn’t always a good thing. Just ask the National Taxpayer Advocate, Nina Olsen. She has always been a big critic of this trend. One of the problems with taking away the “human element” is that cases tend to get handled incorrectly and unfairly. After all, cases are made up of actual human beings with unique circumstances, and computer programs don’t always have the sophistication to consider unique circumstances.
A case in point is the IRS’ new “Offer in Compromise Pre-Qualifier Tool.” What it looks like is an attempt to automate the Offer in Compromise (OIC) process. All you do is plug in your personal financial information and, BOOM! you’re in. Ok, that’s not fair. It doesn’t quite work that way. In fact, the IRS is careful to say that the tool should only be used as a guide and that their final decision is based on the paperwork that is submitted. But it’s not too much of a stretch to imagine the IRS enhancing this offer in compromise pre qualifier tool and fully automating the OIC process somewhere down the line.
The pre-qualifier tool takes the taxpayer through 5 main steps, each step containing a series of specific questions:
- Basic Information – These are the “deal breakers” that normally result in an OIC being automatically returned (such as missing tax returns or an open bankruptcy)
- Assets – Questions about equity in bank accounts, real property, cars, etc.
- Income – Monthly income from all sources
- Expenses – Actual monthly expenses subject to IRS maximum allowances
- Proposal – This is the “MSRP” — the magic number that, if offered to the IRS, may result in an accepted offer
I guess we’ll know how hazardous this tool is when people start ordering an OIC from their tax attorney like they order a sandwich: “One OIC please; I know I qualify because I used the OIC Pre-Qualifier Tool.”