Explaining - Offer in Compromise - Doubt as to Collectability

The Offer in Compromise, Doubt as to Collectability after implementation of the IRS's Fresh Start Program is more favorable to many taxpayers.

An Offer in Compromise - Doubt as to Collectability (DATC) is an agreement between the IRS and the taxpayer that settles the debt for less than the amount owed. The IRS will only accept an OIC-DATC when it believes that the total liability cannot be paid in full as a lump sum or through an installment plan agreement.

To make its determination, the IRS looks at the taxpayer’s income and assets to determine the taxpayer’s reasonable collection potential. When a taxpayer owes more than $100,000 acceptance of an Offer in Compromise - Doubt as to Collectability, requires legal approval from the IRS district counsel.

Offers in Compromise are governed by Internal Revenue Code, Section 7122.

The IRS instituted its Fresh Start Program in 2011 to help struggling taxpayers. The Fresh Start Program made many beneficial changes to the Offer in Compromise program that are very favorable to taxpayers. In certain circumstances, the changes include:

  • Revising the calculation for the taxpayer’s future income.

  • Expanding the treatment and allowance so taxpayers can repay their student loans.

  • Allowing taxpayers to pay state and local delinquent taxes.

  • Expanding the Allowable Living Expense allowance category and amount.

The new policies, that were put in place by the Fresh Start Program, dramatically expand the number of taxpayers that qualify for compromise of their tax liabilities and will lead to a higher acceptance rate of properly structured Offer in Compromise requests.

Putting together an Offer in Compromise package can be very challenging. To have an OIC in accepted, we follow an 8 step roadmap and then have contingency plans that we follow should the original offer not be accepted. It's important to have a professional guiding you through the process - we always strive to get you the lowest settlement available as allowed by law.

Schedule a free consultation today by calling 505-353-9610, 833-StopIRS, or by clicking here.