The IRS may legally compromise a tax liability for one of the following reasons: Doubt as to liability - there is doubt as to whether or not the assessed tax is correct, Doubt as to collectability - there is doubt that you could ever pay the full amount of the tax owed. In these cases, the total amount you owe must be greater than the sum of your assets and future income, or Promote effective tax administration - there is no doubt that the assessed tax is correct and no doubt that the amount owed could be collected, but you have an economic hardship or other special circumstances which may allow the IRS to accept less than the  total balance due.
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Elden Sodowsky provides answers for the most frequently asked questions by clients.

 


Q: Why would the IRS agree to accept a lesser amount?

A: The IRS may legally compromise a tax liability for one of the following reasons:

  • Doubt as to liability - there is doubt as to whether or not the assessed tax is correct,
  • Doubt as to collectability - there is doubt that you could ever pay the full amount of the tax owed. In these cases, the total amount you owe must be greater than the sum of your assets and future income, or
  • Promote effective tax administration - there is no doubt that the assessed tax is correct and no doubt that the amount owed could be collected, but you have an economic hardship or other special circumstances which may allow the IRS to accept less than the  total balance due.


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