As part of your offer, certain debt payments for mortgage, vehicle, etc. are considered as “allowable expense”. These expenses are subtracted form income to determine the monthly income available for payment. As with an installment agreement the collection division must give consideration to the time period that it will take for the debt to be paid. If a vehicle only has 5 payments left, then after 5 months the taxpayer will not have that expense anymore, so it may be removed from the calculation. You can argue that you now have additional expenses, or need to purchase a new car. You may or may not win those arguments. Of course if a mortgage payment will end soon, you will still be allowed the table amount for your living expenses.
There are other retiring debts a taxpayer may have that will clearly be unallowed. This must be taken into consideration when filing an offer or it may come back showing that the taxpayer can afford to pay substantially more then applied for. As a firm, we take into account the many ways the offer division of the IRS has rejected or modified offers and do our best to anticipate these adjustments. Knowledge, experience, and professional training usually wins out over any gimmicks people try to use when dealing with the offer division, including dealing with the issue of retiring debt.
