I recently acquired a client who is in need of a doubt as to liability offer in compromise. The doubt as to liability offer in compromise is a tricky one. Here are a few things to keep in mind:
- You must dispute you owe part of the tax debt or all of the tax debt
- You must dispute the amount of the tax debt
- You must fill in form 656-L Form
- You do not need to fill out a financial form 433-A or 433-B
- You must include a statement indicating why you feel you do not owe the tax or the tax is incorrect
- You must offer an amount more than zero (I usually try to offer one trust fund recovery penalty module)
- Lastly, you cannot dispute an amount owed that has been entered into a judgement or has been decided and subsequently entered by way of the US Tax Court
Most of the doubt as to liability offers I have filed have been for the Trust Fund Recovery Penalty assessed against an individual. The liability stems from a business 941 tax liability and is a penalty assessed if the IRS feels the taxpayer acted willfully or responsibly in the collection and failure to remit payment. In most if not all circumstances the IRS acts inappropriately asserting non-liable parties for simply being a check signer, a corporate officer, husband, or wife, employee, bookkeeper, or a payroll specialist. If the trust fund liability is not appropriately discussed during the interview process, the taxpayer does not have representation, or has poor representation, the IRS will assess the debt. I feel strongly the IRS should change the processes behind the assessments as they have too much power when it comes to wrongful assessments.
None the less, the form 656L can successfully get someone settled out of the trust fund assessment, once assessed. There is another method used to challenging an assessment which is by way of an 843 claim. However, I can address the 843 claim in another blog post. It is similar and there are various pro's and con's to filing an 843 versus an 656L.
As always I would STRONGLY recommend if you have been adversely affected by a trust fund assessment to call us immediately to discuss your options. We can be reached at 720-398-6088 or on our website at www.highlandtaxresolution.com