Doubt as to collectibility means that you, the taxpayer, will never be able to fully pay the tax bill. The IRS will accept a settlement based on a specfic and prescribed formula:
If a you believe he or she qualifies, the taxpayer completes a financial statement on a form provided by the Internal Revenue Service.
IRS will not settle your case for an arbitrary amount. Some tax representation firms today sell customers on the idea of doing an Offer in Compromise for which they do not actually qualify, so a taxpayer must exercise due diligence themselves when considering submitting an Offer in Compromise either themselves or through a representative.
A third payback option, called a Deferred Periodic Payment Offer, allows you to pay the Offer amount over the remaining life of the collections statute. All Federal taxes in the United States have an initial 10 year statute of limitations on collection, starting from the date the tax was assessed. The statute is suspended during certain actions, such as during the time an Offer is being investigated, which extends the statute of collections by an equal number of days. Under a Deferred Periodic Payment Offer, you must include in your offer the realizable equity in assets plus the value of your monthly disposable income over the entire remaining life of the collections statute.
If you have less than 60 months remaining in your collection statute, then you are only required to offer the realizable equity in assets plus your disposable income over the remaining months of the collection statute. This rule applies regardless of whether you intend to submit a Lump Sum Cash Offer, Short Term Periodic Payment Offer, or Deferred Periodic Payment Offer.
If your disposable income is $0, you do not expect to have disposable income for some years, you have special circumtances, you have zero assets and if paying this debt would cause a hardship, the IRS has been known to accept ONE DOLLAR to settle your tax liability through the Offer In Compromise.