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Doubt as to Collectibility

Reasonable Collection Potential

Doubt as to Collectibility is determined in one of two ways. The first way is a fairly straightforward calculation:

If Reasonable Collection Potential (RCP) (Net Equity + Future Income) is less than the tax liability - then in the Offer In Compromise an adjustment can be made to reduce the liability to reflect the RCP.

The second possibility under Doubt as to Collectibility is inclusive of Special Circumstances or DCSC (Doubt as to Collectibility with Special Circumstances).

Special circumstances can include:

  • serious or terminal illness
  • old age
  • other unusual circumstances that indicate that collectibility is in doubt
  • or paying total RCP would jepordize the taxpayers ability to adequitely provid for his or her family

Form 656, Item 9, including a thorough explanation of the circumstances must also be filed.

If you would like help in preparing an Offer In Compromise asserting Doubt as to Collectibility, please fill out the  Free evaluation.