IRS Tax Controversy
“In this world nothing can be said to be certain, except death and taxes”. Benjamin Franklin
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- First, the IRS can accept an OIC if there is doubt as to a taxpayer’s liability.
- Second, the IRS can accept an OIC if there is doubt that the tax owed is fully collectible. Doubt as to collectability exists in any case where the taxpayer's assets and income are less than the full amount of the tax liability.
- Third, the IRS can accept an OIC based on effective tax administration. Here, there is no doubt that the tax is legally owed and that the full tax owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
Offers in Compromise(OICs)
Are negotiated tax settlements with the IRS that allow a taxpayer to potentially lower what they owe in taxes to the IRS. If the IRS is sending you notices that you owe them taxes, this could be a potential solution to significantly decrease the amount of tax that you owe.
Innocent Spouse Relief
When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability.
You remain liable for taxes, and the IRS can still collect them from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax.
To obtain innocent-spouse relief, taxpayers must prove to the IRS that they didn't know, or have reason to know, that their spouse underpaid income taxes. The IRS will also consider factors such as the taxpayer's education and the couple's financial situation.