Saving $85,000 via Offer in Compromise (Doubt as to Collectibility)
The Problem
The taxpayer owed the IRS over $100,000 in back taxes, interest, and penalties from three unfiled tax years. The IRS was threatening a levy on their bank accounts.
The Strategy
We performed a detailed financial analysis based on IRC § 7122. By applying the specific “Doubt as to Collectibility” standards, we identified that the taxpayer’s Reasonable Collection Potential (RCP) was significantly lower than the total debt.
The Execution
Using IRM 5.15.1, we successfully argued for the inclusion of housing and utility allowances that the initial IRS examiner had overlooked.
The Result
- Original Debt: $102,450
- Settlement Amount: $17,450
- Total Savings: $85,000
Primary Authorities
Legal Authorities Cited
- Statute: 26 U.S.C. § 7122 - Compromises
- Regulation: Treas. Reg. § 301.7122-1 - Compromises
- Manual: I.R.M. 5.15.1 - Financial Analysis Handbook