Phishing has evolved from stealing AOL passwords in the ‘90s to scammers impersonating the IRS to get your financial data. This October, for Cybersecurity Awareness Month, remember that the only thing scarier than an IRS audit is an IRS impersonator.

This week’s lineup:

• The IRS Bargain Bin: A guide to the Offer in Compromise, the government's official (and very picky) program for letting you settle your tax debt for less.

• Your 15-Foot Commute Payday: A step-by-step guide to the home office deduction and how to turn your spare room into a serious tax write-off.

• Free Beer, Tax Write-Off: The unbelievable-but-true story of the gas station owner who claimed beer was a marketing expense and won his case in Tax Court.

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Asking the Government for a Discount Without Getting Laughed Out of the Room

There comes a time in life — usually around your third unopened IRS notice and a rapidly emptying bottle of Tums — when you start to wonder, Can I haggle with the IRS? Surprisingly, the answer is yes. Sort of. But don’t get too excited … this isn’t a flea market, and the IRS is not some cheerful vendor tossing in a free avocado slicer. 

This is called an Offer in Compromise (OIC), and it’s the federal government’s way of saying, “Fine, we’ll take what we can get, if you can just prove you’re not hiding a Ferrari in your cousin’s garage.”

The IRS Bargain Bin

What Is an Offer in Compromise?

At its core, an OIC is a formal request to settle your tax debt for less than the full amount you owe. The IRS doesn’t do this out of kindness; they do it because they’d rather get something than nothing. So while you're asking for a deal, they'll be checking if you're living in a mansion or a shoebox.

The Three Flavors of “Please Don’t Make Me Pay That Much”

An Offer in Compromise is not a blanket "I'd rather not" plea. Your argument must fit neatly into one of these three official categories.

1. Doubt as to Collectibility: You simply can’t pay, and you have the depressing spreadsheets to prove it.

2. Doubt as to Liability: You’re not sure you owe this much, or even owe at all.

3. Effective Tax Administration: You technically could pay, but doing so would put you in such financial straits that Dickens could have written a novel about you (Selling your home and living in a van is not that glamorous, despite what Instagram says).

Qualifying Without Qualms

Once you've determined you might be a good match, the IRS is going to take a long, hard look at your financial life to see if you're really the one.

The IRS Pre-Qualifier Tool

Imagine a dating app, but for IRS mercy. Answer some questions at irs.gov, and it’ll tell you whether you stand a chance or if the IRS is going to ghost you.

What They’ll Snoop Into

• Your income and every expense, down to your Netflix account

• Equity in homes, cars, and yes, even your Pokémon card collection

• Whether your lease is reasonable or just the byproduct of bad life choices

So you think you might qualify. Now for the hard part. Get the step-by-step guide to making your offer.

The Home Office Deduction: A User's Guide to Claiming Your Spare Room

Not long ago, "working from home" was a rare luxury. Now, for millions of us, it’s just life. Our commutes have shrunk to a 15-foot journey from the coffee pot to a desk, and spare bedrooms have become global headquarters.

While you might miss the office donuts, there's a potential silver lining: the home office deduction. It's the IRS's complicated nod to the fact that part of your home is now a place of business. But before you start measuring, be warned: this deduction has some very specific rules.

First Things First: Who Are You Working For?

Before diving in, you must answer one critical question: are you an employee or self-employed?

• You're an employee if you receive a W-2 form from a company.

• You're self-employed if you receive 1099 forms from clients, run your own business, or work as a freelancer or independent contractor.

If you are a W-2 employee, you cannot take the home office deduction. The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated this deduction for employees starting with the 2018 tax year. Even if your company requires you to work from home, this tax break is currently exclusive to the self-employed crowd.

However, this suspension is temporary and set to expire after 2025. Keep this on your radar, as tax laws can change.

The Two Great Commandments of the Home Office

If you’re your own boss, you must meet two main tests to qualify.

1. The "Regular and Exclusive Use" Test

This is the rule that trips up most people. Your home office space must meet both conditions:

• Exclusive Use: The space must be used only for your business. That corner of the dining room where you also eat dinner doesn't count. The spare bedroom with your desk and a guest bed is also a no-go. The IRS requires the space to be a distinct area that serves no other purpose in your home.

• Regular Use: You must use the space for business on an ongoing basis, not just for an occasional project. It needs to be a core part of your normal business routine.

While it's doubtful an IRS agent will show up to inspect your home, they can absolutely challenge your deduction in an audit. The burden of proof is on you. Be prepared to provide photos or a floor plan with measurements that clearly demonstrate the space is used exclusively for business. A picture of a desk in a multi-purpose room would instantly disqualify your claim.

2. The "Principal Place of Business" Test

Your home office must be the central hub where you conduct your most important business activities. If you have an outside office and just bring work home sometimes, you can't claim the deduction. However, if you regularly meet with clients in your home office, you can often pass this test even if you also do some work elsewhere.

So, you're pretty sure you qualify. The only question left is how much cash you can actually claim.

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How Free Beer Fueled a Tax Court Victory

Most Tax Court stories start with a voluminous stack of paperwork and end with a migraine. But this one begins with a gas pump, a cooler full of beer, and a genius marketer who figured out that nothing sells a tank of gas quite like a free Bud Light. It’s the rare case where the Tax Court didn’t just read the room; they raised a glass.

Welcome to the Beer Pump

Meet our entrepreneurial hero – a small-town gas station owner. He didn’t have loyalty punch cards or branded keychains. No “buy nine tanks of gas, get the 10th free” promotions. Instead, he offered customers a cold beer along with their gas. It was less of a marketing campaign and more of a neighborhood tradition. A pit stop where you could fuel your car and get an early start on your Friday night, all in one visit.  

The locals loved it. Some rolled in for the gas, others for the frothy fringe benefit, and quite a few for both. The station became a community hub – half service station, half social club. And business? Booming. Turns out, nothing pairs with unleaded quite like a pilsner.

When the IRS Came Knocking (But Not for a Drink)

Eventually, the beer tab wound its way into the business’ tax return as a marketing expense. And that’s when the IRS said: “Excuse me … you deducted what?” 

They argued the beer was a personal gift, not a legitimate business cost. The mood was less “happy hour” and more “show us your receipts.”

The IRS said it was a personal gift. The owner argued it was his best marketing tool. Find out which argument the Tax Court bought — and the surprising precedent it set.

The quick (and slightly prickly) stories we didn’t have time to get to:

• Starting in 2026, a new rule will require workers earning more than $145,000 to make their 401(k) "catch-up" contributions on a Roth (post-tax) basis, a change from the current pre-tax system.

• The IRS is phasing out paper checks and will stop issuing paper tax refunds after September 30th, transitioning to fully electronic payments via direct deposit to increase security and efficiency.

• A recent analysis reveals a significant "brain drain" from the IRS, with a large number of tax attorneys leaving the agency, potentially diminishing its ability to pursue complex tax avoidance cases against major corporations.

Think you're a tax whiz? Prove it with our trivia question below.

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