While these provisions may be well-intentioned, they most probably will result in a Subjective Exception to an otherwise, long-standing, objective measurable criteria of Doubt as to Collectibility (DATC).
This may result in allowing Collection employees to reject an Offer based solely on their Subjective Dislike of a particular Taxpayer or of the Taxpayer’s previous lifestyle (including but not limited to, having owned exotic cars, boats, etc.).
In each of the situations listed, a review of the taxpayer's financial situation should be completed prior to a final determination that a rejection under NIBIG is the appropriate course of action.
In circumstances where the potential for a fraud referral exists, the financial evaluation conducted and verified should be based on the facts and circumstances of the case.
The taxpayer, a payroll service provider, has received from its clients payments of employment taxes in the amount of $10 million.
- The taxpayer remits to the Service an amount equal to the trust fund portion of the employment taxes and designates the payment for application to the trust fund portion of the tax.
- The taxpayer pays no more of the employment tax.
- Meanwhile, the taxpayer dissipates all of its remaining assets, reducing its reasonable collection potential to $0.
- The taxpayer then submits an OIC for $10,000.
- Because the OIC exceeds reasonable collection potential, the taxpayer would qualify for the OIC on the grounds of doubt as to collectability.