(I Don't Owe It)
If you do not think you
owe the tax and the time has passed for an appeal, one option is to pay the tax
and sue the government in Federal District Court or the Court of Claims.
However, that is an expensive option and it is likely you do not have the funds
to pay the tax or hire a lawyer. Another option is to file an Offer In
Compromise for "doubt as to liability". This type offer is filed using
Form 656-L. It is only a two page form - however you must attach all the
documentation available to support your contention that you do not owe the tax.
This offer will be reviewed by someone in the Examination Division. You may be
contacted to provide additional information or to meet with the Revenue Agent.
If your offer is denied, you will be given an opportunity to take your case to
Appeals. This is your best place to have the case decided in your favor.
You should not offer a frivolous amount - even if you don't think you owe
anything. For instance - if they say you owe $100,000 and you think it would
cost $ 10,000 to sue the government over the issue and you think you have an 80%
chance of winning - then offer $ 30,000.
This is an example only,
most times the issues are too complex to make general statements. The bottom
line is, if you owe $ 100,000 and only offer $ 100 because you are convinced you
owe nothing - your offer will be rejected quickly.
The government will also weigh the risk of litigating it. If they think they have an 80 % or better chance of winning - they will deny your offer. If
they think they only have a 20 % chance of winning - they will probably accept
close to what you offered. If it is somewhere in between, then you may do some
horse trading.
I strongly urge you to contact an experienced professional to help you file an
Offer in Compromise. Contact us today to learn more. We have vast experience in offers and appeals.