Dissipated Assets
Dissipated assets occur when money or an asset is used for a purpose other than paying your federal tax liability. For example, an individual with a tax debt takes a second mortgage on his house to pay for replacement of the roof. The Internal Revenue Service may view the funds from the second mortgage as a dissipated asset. The Internal Revenue Service may assert that any dissipated assets should have been used to pay the tax debt and refuse to settle for less than the amount of the dissipated asset. As a result, a dissipated asset may cause the Internal Revenue Service to refuse to negotiate with a taxpayer.
