SAN MATEO, CA:  Navigating IRS Issues: Offer in Compromise (Doubt as to Liability) vs. Audit Reconsideration

Offer in Compromise (Doubt as to Liability)

If you genuinely believe that the IRS's claim against you is incorrect, the Offer in Compromise with doubt as to liability is a potential solution. This approach lets you propose a settlement amount that aligns with your actual tax obligation. To qualify, you must provide evidence that challenges the accuracy of the tax liability. A letter of explanation with a "this will never happen again" is a recipe for a rejected offer.  

Audit Reconsideration

When you disagree with the outcome of an audit, Audit Reconsideration offers a second chance to present your case. This option is ideal if you can prove the audit was conducted unfairly or if new, previously unconsidered information has surfaced.  Also, as quite often happens, you have moved and never received the audit notice in the mail---or you simply spaced out and forgot to respond until after the due date.  Audit reconsideration offers a second "bite at the apple"--but be warned:  You are at the mercy of the IRS's decision.  There is no appeal rights if your reconsideration is rejected.  

What's the difference?

The major difference between these methods is the timing and nature of the dispute. Offer in Compromise-Doubt as to Liability addresses tax assessments that have become final.  You are presenting evidence that may have never been considered before.  The focus is on the accuracy of the IRS's final determination. Audit Reconsideration, however, is for post-audit disputes, allowing you to challenge audit conclusions or, as we discussed earlier, if you missed the chance to respond to the audit all together.

Which one should you choose?

Your choice depends on your situation. If you're confident in the inaccuracy of the IRS's assessment, Offer in Compromise with doubt as to liability might be your solution. If you've already been audited and believe it was unfair, Audit Reconsideration provides an opportunity to present your case.

Not sure?

Navigating IRS complexities demands expertise and strategy.  If you don't know the roadmap the IRS uses to settle matters, you are already at a huge disadvantage.  Whether you're grappling with tax liability concerns or audit disputes, a phone call to the IRS won't help---they will not discuss strategy and best possible outcomes for your individual situation.  Discuss your options with a tax attorney who can analyze and personalize a solution for your tax trouble.

Kevin Rego