There are three different types of IRS Offer in Compromise. An IRS Offer in Comprise based on Doubt as to Liability is a less popular type.
IRS Offer in Compromise Doubt as to Liability
This type of IRS Offer in Compromise is filed when you believe a mistake is made. The mistake can be made by the IRS or accountant. If the mistake is corrected, you will owe less taxes.
Example: You work as a bookkeeper. The business you work for owes payroll taxes. The IRS investigates the business to understand why payroll taxes were not paid. The IRS determines that you were personally responsible for unpaid payroll taxes. You believe this is incorrect because you had nothing to do with the unpaid payroll taxes. It was the owner’s responsibility.
You can file an IRS Offer in Compromise based on Doubt as to Liability to reverse this decision.
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IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.