Offer in Compromise based on Doubt as to Liability

Today I want to discuss the Offer In Compromise based on doubt as to liability.  This means you do not believe you owe the tax the IRS is charging you.  In this case you do not have to submit any financial information.  However, you do have to give a detailed explanation why you are not liable for the tax and

 

 

submit supporting documentation to prove you are right.  This documentation might be in the form of supporting affidavits of co-workers, accountants, attorneys or other professionals who could speak as to why you are not liable.  In addition, you might be able to provide records proving that you already paid the tax or showing it was received by the IRS but never applied to your account.  It is important to note that there is no filing fee for this type of Offer.

The most frequent situation for these offers is when someone, such as a payroll clerk, is charged with the Trust Fund penalty for unpaid payroll taxes and feels he had no control over how the money was spent.  In this type of Offer, you must still offer to pay some amount.  This is because there is always an uncertainty whether or not a tax court judge would find the taxpayer liable for the tax.  Therefore, both you and the IRS are “gambling” on the outcome and both must be willing to compromise to obtain a sure result. The taxpayer will pay a lower amount and the IRS will at least get some of the tax money.  The amount you offer may be as low as $100.00 or might be a percentage of the total.