Although they may seem small and unimportant, there are several errors that people commonly make on OIC forms which can have large consequences. These mistakes might only lead to confusion and a delay in the case until the mistake could be sorted out.
However, other times these same mistakes would cause the offer to be rejected immediately. Regardless of the outcome, both you and your client lose time and money when either of these things happens. To save yourself the time, money, and anguish of making such errors, let's go over a few common mistakes, why they're damaging, and how you can avoid them. These are the most common mistakes that need to avoid:
Many tax professionals make mistakes with math, but it's not because they're bad at math. Filling out Form 433 is complicated, requiring the juggling of dozens of numbers along with explanations and documentation. It's no wonder that sometimes things get forgotten.
If an error does occur--like a wrong value for a quick sale or an incorrect calculation of expenses--the OIC process will grind to a halt until the mistake is fixed.
Leaving Blank Spaces
Without any indication, it's frequently unknown why a practitioner left a field blank on either a 433 or 656. Is the reason because it doesn't apply to the taxpayer? Because they don't understand how to answer?
It's always a disappointment when something small can ruin a big decision, but sadly, it happens more often than one would like. The best way to prevent this from happening is by writing "N/A" or zero in any spaces that don't apply to the taxpayer.
A common error occurs when a taxpayer's property is valued at less than what they owe on the mortgage. To calculate the amount of equity the taxpayer has, the practitioner would subtract negative equity from net realizable equity (NRE). However, you cannot do that as it may seem beneficial to your client. Any asset worth less than what is owed on it should be reported as having zero equity.