It can be a legitimate option if you can't. The question of liability arises when there is a genuine dispute over the existence or amount of the correct tax debt under the law. If you have legitimate doubts about whether you owe part or all of the tax debt, you will need to fill out Form 656-L, entitled Transaction Offer (Concern Regarding Liability), in PDF format. The IRS has the authority to cancel all or part of your tax debt and settle with you less than what you owe.
This is called an offer of commitment (OIC). The IRS statute of limitations refers to the period of time during which the Internal Revenue Service (IRS) can legally collect taxes, penalties, and interest from a taxpayer. The standard statute of limitations for tax debts is 10 years, starting from the date the tax return was filed or the tax was assessed, whichever is later. If there are discrepancies in your tax return or if you need to request a refund, keep your tax documents for up to 7 years.
In some cases, there is no limit to how long the IRS can audit, such as unfiled tax returns or intentional tax evasion. If you agree with the denial, you can send the full payment of your tax debt to avoid additional interest and penalties, or request an installment agreement to pay your tax debt. Keep your tax returns and supporting documents for at least three years from the filing date or the tax return due date, whichever is later.
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