Have you ever received a notice from the IRS claiming you owe taxes but are certain there’s been a mistake? Maybe you believe the IRS has assessed the wrong amount, or there’s an error in your tax return. In such situations, you might consider submitting a “Doubt-as-to-Liability” Offer in Compromise (OIC-DATL). Let’s dive into what this means and when it’s appropriate to use this option.
What is a Doubt-as-to-Liability Offer?
A Doubt-as-to-Liability Offer in Compromise is a proposal you can submit to the IRS when you genuinely believe you don’t owe the tax debt in question. This type of offer asserts that there is a legitimate dispute over the accuracy of the assessed tax liability. The goal is to settle your tax debt for less than the full amount based on evidence that demonstrates you are not responsible for the total liability.
When to Use a Doubt-as-to-Liability Offer
- Erroneous Assessment: If you have solid proof that the IRS has made an error in assessing your tax liability, such as misinterpreting your tax return or using incorrect data, a Doubt-as-to-Liability offer may be appropriate.
- Documentation Issues: Sometimes, the IRS may lack proper documentation or misplace your submitted information, leading to an incorrect tax bill. You may use this type of offer to resolve the issue if you provide the missing or corrected documents.
- Audit Mistakes: If your tax debt arose from an audit and you believe the auditor made mistakes in calculating your liability, presenting a Doubt-as-to-Liability offer with supporting evidence could help rectify the situation.
- Legal Disputes: When there’s a disagreement on the interpretation of tax laws or regulations that led to the assessment, and you have a strong legal argument, this type of offer can be your pathway to resolution.
- Incorrect Third-Party Reporting: If third parties, such as employers or financial institutions, have reported erroneous information to the IRS, leading to an inflated tax liability, you can use a Doubt-as-to-Liability offer to correct this.
- Errors in Tax Credits or Deductions: If there are mistakes in applying tax credits or deductions that have resulted in an erroneous tax liability, you can present a Doubt-as-to-Liability offer to resolve these discrepancies.
Final Thoughts
The key to a successful Doubt-as-to-Liability offer is thorough documentation and a clear, compelling argument substantiating your claim. By taking these steps, you can address and resolve disputes with the IRS, potentially saving yourself from paying a tax debt you don’t owe.
