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Doubt as to Liability Offer Attorneys in St. Louis Guiding Clients Through Complex Tax Matters

If you’re a business owner or independent contractor, you’re probably already used to getting a tax bill instead of a tax refund at the end of the year. But what happens when that bill is much larger than you expected? If you think there is an error with how much money you owe the IRS, a doubt as to liability offer may be an option.

Any time you’re dealing with the IRS, it can be intimidating and confusing. Tax law is complicated and requires a thorough understanding of the tax codes and how they apply to real-world situations. If you don’t believe you owe a tax debt or there is some doubt as to the correct amount of the debt, let the attorneys at the Law Firm of Lance R. Drury, P.C., help you find a way forward.

What Is a Doubt as to Liability Offer

A doubt as to liability offer — also known as IRS Form 656-L — is used when there is a legitimate doubt that a tax debt is legitimate. In some cases, you may doubt that you owe that debt at all. In others, you may acknowledge the debt but believe that the amount is incorrect. By filing this form, you are disputing the tax debt in some form and submitting an offer of how much you believe you do owe instead.

Doubt as to liability offers can only be used when the tax debt has not already been decided in court. If there is a court decision or judgment ruling that the tax debt is legitimate and accurate, you will need to discuss alternative options with an attorney. A doubt as to liability offer can also only be submitted for the relevant tax periods.

What Is an Offer in Compromise?

An offer in compromise is an option for some people who owe a tax debt. It establishes a compromise between the taxpayer and the IRS and settles the tax debt for less than was fully owed. This allows the IRS to get some of its money and the taxpayer to pay their debt without causing themselves financial harm. There are a few different types of offers in compromise, and doubt as to liability is just one form. The others include doubt as to collectibility and effective tax administration. If you aren’t sure which one is the best option for your particular scenario, a tax lawyer can help.

What Are Some Examples Where a Doubt as to Liability Offer May Be Appropriate?

Every tax situation is different, which is why it’s important to speak with a tax lawyer about your specific circumstances and get legal counsel about what you should do next. However, the following examples can provide some general information about when a doubt as to liability offer may be appropriate.

Mistaken identity: If you share a name with someone, it’s possible that you could receive their tax bill in error. It’s also possible for you to be misidentified as the decision-maker for financial aspects of a business. If you can prove that you had no responsibilities for collecting or paying the business’s taxes, a doubt as to liability offer may apply.
Poor tax advice: If you claim deductions or otherwise lower your taxable income upon the advice of a tax professional and are later audited and billed by the IRS, the fault may not be your own.
Issues with income reporting. If there is a difference between how much income is reported by a business versus how much a client says they paid, it could result in an incorrect tax bill.

If there has been an issue with your income reporting or tax preparation that has resulted in an incorrect tax debt, attorneys skilled in IRS tax resolution strategies can help you understand if a doubt as to liability offer could help.

Who Is Eligible for an Offer in Compromise Based on Doubt as to Liability?

To be eligible to file an offer in compromise based on doubt as to liability, you must not already have a court decision regarding your tax debt. You cannot be involved in an open bankruptcy filing, and you cannot owe the IRS and restitution. If you’ve already filed a doubt as to collectibility offer for the same debt or in the same tax year, you cannot file a doubt as to liability offer.

Does the IRS Have to Accept My Offer?

Making an offer in compromise with doubt as to liability is just that: an offer. And the IRS is under no obligation to accept the offer. Each offer is reviewed on an individual basis and determined whether a doubt as to liability offer is applicable and whether the settlement amount is reasonable. Doubt as to liability offers must be more than $0, which means you can’t just use the doubt as a way to completely avoid payment. The more evidence you can provide that there is doubt as to whether you owe the debt or the amount, the better your chances are of getting your offer accepted.

At The Law Firm of Lance R. Drury, P.C., we know how difficult it can be to go up against the IRS and how stressful it is when you’re being told you owe a tax debt. Failing to pay a tax debt can result in seizures of your assets and liens placed on your property, but there is help available. Contact one of our offices today to find out what your options are and whether a doubt as to liability offer may be one of them.
Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.