If you have been slapped with a huge back tax bill by the IRS, one solution is to file an Offer in Compromise, in which you promise to pay off a reduced tax bill within a fixed amount of time. A popular clause invoked in an Offer in Compromise claim is “doubt as to collectibility.” This means you have no earthly hope of ever paying off your tax bill in-full, and the IRS should settle for what it can get. Sound good? Well, it's not as easy as it seems! The IRS Will Seriously Question Your “Doubt as to Collectibility” Claim As you might expect, no IRS revenue officer will accept a “doubt as to collectibility” claim at face value. When hit with a big tax bill, plenty of Oklahoma taxpayers turn up the linings of their pockets and say “I'm broke!” But, your definition of “broke” may seriously differ from that of the IRS! In the course of negotiating your “doubt as to collectibility” claim, the IRS will examine your finances in detail, including:
- Any bank accounts, retirement accounts, or trust funds held in your name, which you “forgot” to mention to your revenue officer
- Your major assets (house, car, etc.), which the government may force you to sell to settle your bill
- Any assets held by close family members (children, parents, spouse), if there is a suspicion you have transferred these assets to evade paying your taxes
- If you currently have a job, the payroll records of your employer, to verify you are being paid what you claim
- Any suspicious irregularities in your finances. If you insist you are unemployed and flat broke, how did you manage to take that cruise to the Bahamas last year?
- Testimony obtained from friends, neighbors, acquaintances, etc., about the true state of your finances or lack thereof
A “Doubt as to Collectibility” Claim Will Put You Under the IRS Microscope Simply put, if you make a “doubt as to collectibility” claim, you will be inviting the IRS to pry into every nook and cranny of your life. If an IRS revenue officer finds any discrepancy in your finances, he may well conclude you are lying about your assets and insist on collecting the full amount. What can you do to make your claim stick? A good first step is to hire an experienced tax expert from the Oklahoma firm of Travis W. Watkins, PC. Call us today at (405) 703-5689 to find out what we can do for you!
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