An offer to compromise on doubt as to liability generally will be considered acceptable if it reasonably reflects the amount the IRS would expect to collect through litigation.
Except for offers based solely on doubt as to liability, this includes financial information provided in a manner approved by the IRS.
Practitioners should be aware that the DOR can compromise proposed assessments using three distinct theories or methodologies: 1) doubt as to liability regarding tax, penalty, and interest assessments; 2) doubt as to collectibility regarding tax, penalty, and interest assessments; and 3) reasonable cause regarding penalty assessments.
Generally, doubt as to liability has historically been resolved in favor of the assessment by the DOR's informal protest procedures.
Notwithstanding these constraining forces, in some cases, conferees involved in the dispute resolution process may have received direction from the DOR's general counsel regarding the manner of resolving specific issues where doubt as to liability is recognized.
shall make a determination of whether there is doubt as to liability for tax or interest based on the facts and circumstances of the specific case.
2) Reliance upon the express terms of written advice given by the Department may be the basis for doubt as to liability.
Any doubt as to liability compromise request made in the DOR's informal protest procedure should incorporate within it one or more of the bases provided by this rule as evidence of doubt as to liability.
Therefore, the taxpayer's representative should be alert for possible reductions in the assessment where doubt as to liability is not the issue so that a revision rather than a compromise is appropriate.