A doubt as to liability Offer in Compromise (OIC) can be used to settle tax debt when there is a legitimate dispute about whether you actually owe the debt. If accepted, you may use a Doubt as to Liability OIC to settle your tax debt for much less than you owe, sometimes for pennies on the dollar.
The process of preparing a Doubt as to Liability OIC takes a lot of effort and knowledge of IRS practices, so consult a tax attorney for assistance.
When Doubt as to Liability Exists
Doubt as to liability generally exits when there is a dispute about the tax assessment that couldn’t be argued earlier for some reason. In other words, the time to dispute the tax liability has passed, but you have a good argument for disputing it.
Doubt as to liability may come up in the following situations:
- New evidence is found after a tax assessment.
- You were unaware of a tax assessment and never received notices from the IRS.
- The IRS audited your return and adjusted your tax liability, but you didn’t receive notices from the IRS.
- You filed an amended return, but it was never processed by the IRS.
- Errors made by employers on wage information returns or errors made by the IRS.
Consult with a tax attorney before submitting a doubt as to liability OIC. You’ll need a good legal argument and supporting evidence to back up your claim.
Also keep in mind that if you’ve already disputed the tax liability in Tax Court and lost your case, you won’t be permitted to submit a Doubt as to Liability OIC.
Other Tax Resolution Options
You should use all available methods for disputing the tax before submitting a Doubt as to Liability OIC. If you still have collection due process rights, use them to request a hearing and dispute the tax.
You can’t submit a Doubt as to Collectibility OIC at the same time as your Doubt as to Liability OIC. However, if you are otherwise eligible, you can submit a Doubt as to Collectibility OIC if your Doubt as to Liability OIC is rejected.
Contact an Attorney
Contact a tax attorney to figure out the best path forward in your tax resolution case.
Ayar Law provides creative solutions to your tax problems, including Offers in Compromise and penalty abatement. Call us at 800.571.7175 for free, no-obligation advice from one of our experienced attorneys.