What Does Doubt As to Collectibility Mean?

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You’ve determined that an offer in compromise is your best bet for resolving your tax issues. Unfortunately, the hard work is only about to begin. As you launch into the OIC application process, you will quickly discover that a lot depends on whether you possess a doubt as to collectibility or doubt as to liability. Not sure which doubt applies to your situation? Read on to find out:

Doubt as to Collectibility: The Basics

Doubt as to collectibility refers to your ability — or lack thereof — to pay your current tax debts in a reasonable amount of time. If your income and assets are low enough, the IRS may conclude that it will be impossible to collect on your tax debt without an offer in compromise. Essentially, your account is deemed uncollectible if your assets and income total less than your current tax debt. Furthermore, the collectibility of your account may be called into question if it appears that IRS efforts to collect will extend beyond the statute of limitations.

Establishing a Doubt as to Collectibility

Doubt as to collectibility can prove surprisingly difficult to demonstrate. The IRS rarely takes such claims at face value and may closely examine your situation to determine whether your financial status is as dire as you’ve suggested. Be prepared for a thorough examination of your bank accounts, your pay stubs, other sources of income, and even assets held by close family members. Any suspicious financial circumstances could be deemed cause for a rejected offer in compromise.

Are you struggling with the application process for your IRS offer in compromise? Whether you intend to demonstrate a doubt as to collectibility or doubt as to liability, you deserve assistance from a trusted tax professional. The Highland Tax Group can help. Contact us today to learn more about your options for bringing your IRS issues to a close.