Tax Law: Doubts as to Liability and Collectability

Dealing with any tax issue with the IRS can be a headache, particularly if you find yourself in mounds of debt. Regardless of how many notices or penalties you have received, it’s important to remember that you do have options. The IRS details these on its website and wants to work with you to alleviate your debt as well as get their money. One option provided by the IRS for alleviating tax debt is called the Offer in Compromise.

In general, an Offer in Compromise is an agreement between the taxpayer and the IRS that settles your debt for less than the full amount owed. However, the OIC is not available to everyone. In general, there are three bases upon which a person can seek an OIC: 1) Doubt as to Collectibility, 2) Doubt as to Liability, and 3) Effective Tax Administration (i.e. where paying your full debt would cause you great financial hardship). For the purposes of this blog, we’ll be focusing on the first two qualifying bases as compared and contrasted in the sections below.

Doubt as to Liability

Doubt as to liability occurs when the IRS has made a mistake, and the tax debt as assessed is incorrect or the bill issued doesn’t belong to you. If you have a doubt regarding the amount of tax debt assessed by the IRS, then this might be the option you choose to take towards getting it reduced. An example of when this might occur is if you are audited and the IRS agent fails to consider all of your evidence (like receipts and business expenses).

Doubt as to Collectibility

In contrast, doubt as to collectibility occurs when the IRS believes that you will be unable to pay back your full debt, including any penalties or interest that have accrued. The IRS will not simply allow an OIC on the basis of your being unable to pay your debt in full. The IRS will still hold you to your entire debt if it believes that you can pay it back by setting up an installment plan, which is where you pay reasonable amounts each month until the debt is satisfied. As you can see, this differs from the doubt as to liability because here you are dealing with an amount that you actually do owe versus an amount that has been incorrectly assigned to you.

Speak with an experienced tax law attorney today.

Navigating the complexities of tax law and the IRS is a daunting and tricky thing to do. It’s for these and many other reasons that it’s essential to work with an experienced tax attorney every step of the way. At Weisberg Kainen Mark, PL, we understand how difficult resolving debts can be, particularly when there are formal government agencies getting involved in the process. If you have questions about how to alleviate your tax liabilities and want to see if you qualify for an Offer in Compromise or one of the IRS’ other means of resolution, please don’t hesitate to contact us today!

 

Written by Weisberg Kainen Mark, PL

Weisberg Kainen Mark, PL

Weisberg Kainen Mark, PL is a Miami-based law firm focused on providing comprehensive legal support to individuals and corporate entities caught up in tax controversies or charged with a criminal act. As experienced trial lawyers with a passion for justice, our firm provides clients with compelling advocacy, attorney availability, and creative solutions to your tax or criminal law matters.