R

  • RCP Equation:

    Total Income - Total Expenses = MDI (Monthly Disposable Income)

    MDI x FIP Factor (Future Income Potential) = Future Income

    Future Income + Equity in Assets = RCP

 

  • Reasonable Collection Potential

    The total realizable value of the taxpayers assets plus any future income. The total is generally the minimum Offer in Compromise amount.

 

  • Recovery Period

    The period of time, normally in years, over which the basis (cost) of an item of property is recovered (by depreciation).

 

  • Refund

    When an individual has more tax withheld from their wages than what is owed on their tax return, this difference results in an overpayment of taxes or a refund.

 

  • Refund Statute Expiration Date

    A taxpayer may request a refund of an overpayment within three years from the time the return was filed or within two years from the time the tax was paid, whichever is later. If no return was filed by the taxpayer, the claim must be filed within two years from the time the tax was paid (IRC 6511(a)).

 

  • Retired Debt

Debt that is completely paid off. However, if the IRS is evaluating an individual’s ability to pay back debt when considering a debt relief compromise, they may consider debt that will soon be paid off as retired debt. It is important to consider debt that the IRS may consider “retired” when filing for an offer in compromise.