By Renee Sieradski, EA

My husband was diagnosed with bipolar disorder after we had been married for 8 years. When I told others I found their reactions unsettling. Most had a deer in headlights look. Why the surprised and embarrassed response?
“The stigma of mental illness” is what I read online.

The dictionary defines stigma as “bad reputation, shameful, mark of disgrace.” But I would reason, “My husband became ill, he didn’t choose to have the disorder, so I couldn’t understand why my friends didn’t want me to talk about it. His father and brother had the same diagnosis. It would seem it was in his genes. So why would he be in disgrace?

Soon after his diagnosis, we found that medications weren’t working. The psychiatrists tried every medication on the list. Nothing fixed his suffering. He was given a special term, refractory bipolar, meaning he didn’t respond to conventional methods. Then, something I had never heard of was suggested to us- ECT shock treatment

We went ahead with the treatment.  When I told my friends their jaws dropped in horror, with comments such as, “I didn’t know they did that anymore”. I discovered here was another stigma for receiving this treatment.

Since the initial course of shock treatment in 2010, he has had 4 series of maintenance ECT treatments. As I write this article, he is currently undergoing a series of ECT’s. So, I am again reminded of the surprised reactions I received years ago.

We are stigmatized for talking about having mental illnesses and stigmatized for receiving the necessary treatment for these illnesses.

I’ve decided if someone asks where he is, why he’s missing from church or social events, I will simply say he is having therapy to help with depression. Unfortunately saying the words depression or the blues is easier for society to handle.

What exactly does “pennies on the dollar” refer to? 

Pennies on the dollar is a reference to the IRS Offer in Compromise program. It allows eligible tax debtors to pay the IRS an amount of money that is less than what they owe in order to wipe out the entire tax liability.

In advertising, you’ll hear companies talk about settling for 20%, 10%, or even less. These ads, and the sales people you talk to on the phone, are trying to sell you an Offer in Compromise service package. Many of their web sites even have interactive calculators where you type in how much you owe the IRS, and it’ll spit out a, “You may only have to pay $xxx” message.

The phrase “pennies on the dollar” was actually determined several years ago by the IRS to be a form of deceptive advertising. They explicitly instruct licensed practitioners the use of this phrase is a violation of ethics. However, since the IRS doesn’t have jurisdiction over firms market these services, it comes into the FTC’s purview to look out for these deceptive marketing practices.

Sales people are trying to convince taxpayers that what you settle for is some fixed percentage of your tax debt. However, this is blatantly incorrect. There is absolutely no provision in the tax code for allowing a taxpayer to pay a set percentage of their tax liability and calling it good. It has never existed, and most likely never will.

Instead, the amount of your Offer in Compromise settlement is calculated using a very, very strict formula…and the formula is NOT a secret — it’s available on a worksheet in IRS publication 656B.
Based on this formula, if you have equity in assets that exceeds your tax debt, you simply don’t qualify. Period. End of story. For most individuals, the common thing is going to be equity in a homee or rental properties, equity in a collection of classic cars, stamps, coins, guns, art, etc. If the value of ANY of those assets is greater than your tax debt, you do not qualify for the Offer in Compromise program and cannot settle for “pennies on the dollar” – there is no way around this.
In the same vein, if you are a high-income earner, it’s also highly unlikely you will qualify for the Offer in Compromise program. The reason for this is the IRS only allows certain amounts of money every month as “eligible expenses” for housing, cars, food, etc. If your lifestyle exceeds these amounts, the IRS doesn’t care — they will only allow you to claim the National Standard expenses.

Any monthly income over those amounts goes into your offer amount.
In these circumstances, you may qualify for a period of up to 12 months to make a “lifestyle adjustment” and reduce your living expenses to come into line with IRS standards. This will often involve selling luxury homes and getting rid of toys such as cars or boats. Keep in mind these items are all covered by your tax lien, so any proceeds from the sale of these items technically is owned by the IRS, and should be paid to them. A good tax representative, such as a Federally Licensed EA, can assist you with structuring these sales so both you and the IRS get something out of it.

Beware of anybody promising your tax debt can be settled for some fixed percentage of the debt. That’s not the way it works, and it never has. Anybody trying to sell you on that idea is selling you swampland in Florida, and you should seek assistance elsewhere.

Renee Sieradski is a Tax Specialist, for information and to set up a consultation visit or call 602-687-9768.