Many clients that come to me understand the gravity of their situation, and treat it accordingly. But sometimes, they don’t. I can’t tell if they truly doesn’t understand what’s at stake, or if they are just avoiding reality. Whenever I have a client who is lax in their approach, it makes my life harder, and interestingly, I feel all worried and they seem totally fine with it. I just want to yell “you’re playing with fire, scarecrow!”. Here are some examples of what clients have done to sabbotage their chances of Offer In Compromise success:
1) Take Their Sweet Time With The Paperwork – Especially when it comes to the 60 day letter, time is of the essence. Once you pass the 60 day mark (or even come close to it), the file gets referred to the Treasury. And once it gets to Treasury, you’re OIC is dead. Despite warnings of how critical it is to be timely with the OIC paperwork (I even give them a list!), I’ve had my fair share of clients delay the production of documents like tax returns or personal financial statement (SBA Form 770), which usually ends with us scrambling at the last minute to get an OIC submitted. The last time this happened, we submitted the OIC package on the last possible day, and the SBA rejected within days. My theory is that they were simply mad that we waiting so long, and didn’t even bother actually considering the settlement offer.
2) “Ballpark The Numbers” – Whenever I see the personal expense section of the PFS contains very rounded looking numbers, I know that the client didn’t use actual expenses. And that bothers me, because when I was a workout officer, I felt that it meant that A) they weren’t taking the process seriously, and B) they were likely “fudging” other numbers too. When you are asking the SBA to forgive hundreds of thousands of dollars, you really should be giving them confidence that the information you are giving them is accurate. They’ve seen enough Offer In Compromise packages to know that $2000 per month, per person, on groceries is highly unlikely.
3) They Look To Cut Corners – Some clients want to have their cake, and eat it to. I make it clear that trying to sell the business to a friend with the intent of buying it back is not something I endorse, but some that’s something they keep asking about. Then they want to misrepresent how much money they make. Then they want to know how they can move assets to keep them “safe”. While I can appreciate their desire to keep as much of their cash as possible, the basis of any settlement is good faith and full disclosure. The people who review SBA Offer In Compromise packages aren’t dumb, so trying to use misdirection is simply asking for trouble.