Grounds for Granting OIC Relief

Acceptable Grounds for IRS Granting of Offer in Compromise Relief

The IRS may accept an offer in compromise based on three grounds: doubt as to collectability, doubt as to liability and exceptional circumstances. At the Law Office of Neil Crane, LLC, our attorneys can help you determine if you are eligible for an offer in compromise and whether you have adequate grounds for requesting such an offer.

To learn about your tax debt relief options from a lawyer at our office, contact us online, call us at 203-230-2233 or call us toll free at 888-249-3027.

Doubt as to Collectability

This ground applies if the taxpayer could never pay the full tax within the statutory period for collection. To determine doubt as to collectability, the offer must be based upon net realizable asset values plus monthly disposable income over the statutory collection period. The proper calculation of a total offer amount must contemplate both criteria and provide document proof that the taxpayer's offer properly reflects the collectability of assets and income as of the statutory collection period. Any offer that does not properly reflect an acceptable calculation of both components will result in denial of the offer in compromise and a serious delay and setback to a taxpayer's attempt to solve overwhelming tax debt through an accepted offer in compromise.

Doubt as to Liability

This means that there is a legitimate question about the correctness of outstanding assessed liability. Reasonable doubt may exist in the proper calculation of the assessed tax as a result of a legal mis-assessment for the failure to consider evidence of non-liability as produced by the taxpayer or the existence of new evidence pertaining to the existence of true taxpayer liability.

Exceptional Circumstances: Effective Tax Administration

In certain unique situations, the IRS may grant taxpayer relief despite the fact that the tax debt is correct and the taxpayer does have collection potential. This allows the taxpayer compromise on the valid tax debt that is potentially collectible from assets that the IRS will allow the taxpayer to retain due to exceptional circumstances. To qualify for this type of extraordinary relief, the taxpayer or their qualified representative must prove that:

  • Collection of the tax would create an economic hardship; or
  • Collection of the tax would be unfair; or
  • Collection of the tax would be inequitable

Proving that collectible tax debts should not be collectible from existing assets requires unique factual circumstances and strong taxpayer advocacy in order to prove that the compromise is proper for the purpose of effective tax administration. These circumstances often require proof of physical or psychological information. Advanced age may also be grounds for granting offer in compromise relief for special circumstances.

To speak with a lawyer about whether you have adequate grounds to request relief from the IRS through an offer in compromise, schedule your free initial consultation with the Law Offices of Neil Crane, LLC. Contact us online or call us at 203-230-2233 or toll free at 888-249-3027. We have office locations in Hamden, Bridgeport, Ridgefield, Waterbury and Rocky Hill, Connecticut.

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