IRS OFFER IN COMPROMISE-DOUBT AS TO LIABILITY AND AUDIT RECONSIDERATION AS TOOLS TO SOLVE YOUR TAX PROBLEMS
Kevin Rego • August 29, 2023
SAN MATEO, CA: Navigating IRS Issues: Offer in Compromise (Doubt as to Liability) vs. Audit Reconsideration
Dealing with IRS problems can be daunting. Knowing your options and the IRS processes are key to a successful outcome.
Two standout methods for resolving tax disputes are: Offer in Compromise (OIC) with doubt as to liability, and Audit Reconsideration. These methods address distinct scenarios and vary in their processes.
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
Law Office of Kevin Rego
650-933-5222
It starts with a simple envelope. It looks official, perhaps even polite. You see the Internal Revenue Service return address, feel that familiar jolt of anxiety, and tuck it into a kitchen drawer to deal with "later." But in the world of IRS collections, that envelope is not just a bill; it is the first trigger in a sophisticated, automated sequence designed to escalate until the government gets your attention! Most taxpayers believe the IRS can suddenly decide to freeze a bank account or garnish a paycheck willy nilly. The reality is much more methodical. The IRS follows a very specific roadmap of notifications, and understanding where you are on that map can be the difference between a simple payment plan and a financial disaster. Phase one is the Notice of Tax Due and Demand for Payment, often a letter with the title CP14. This is your early-warning signal. At this stage, the tone is relatively firm but professional. The IRS is giving you nudge--"hey, you may have forgotten about this bill". If you act here, you have the most leverage and the most options. Paying the bill or investigating collection alternatives are wide open. If that letter goes ignored, the sequence shifts. You will likely see the CP501 or CP503. These are formal reminders, but the temperature is rising. By the time the CP504 Intent to Levy lands in your mailbox, the IRS is no longer asking; they are telling you that they have the legal right to seize your property or income. This is the final stage of the "urgent" phase before you enter the "emergency" phase. The "gloves come off" and everything changes when you receive the Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This letter is your last line of defense. It includes Form 12153, which allows you to request a Collection Due Process (CDP) hearing. Filing this appeal is often the only way to legally halt the collection machine and force the IRS to sit down at the negotiating table. If you miss the 30-day window following this letter, the IRS is legally cleared to start taking your money. There are some legal options that are still open with an equivalency hearing request, but that carries less "punch" than a CDP request. The most important thing to remember is that the IRS collection process is a series of escalating steps, not a single event. Addressing the issue in the early stages is always the best answer. IRS letter and notices are written in a dense, technical language that can be difficult to decode. If you have received a letter from the IRS and you don't know exactly what it means or how much danger you are in, please contact me today. I can send you a "tax letter translation" to help you understand precisely where you stand in the process and how we can work together to stop the letters for good. --- If you've received notice that your tax debt has been assigned to a private collection agency and you're not sure what to do next, contact my office today for a consultation. Kevin Rego Law Office of Kevin Rego 650.933.5222 Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.
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