What you should know before preparing an Offer in Compromise for a State Tax agency
Are you eligible for an Offer in Compromise?
The Offer in Compromise program allows you to offer a lesser amount for payment of a non-disputed final tax liability.If you are an individual or business taxpayer that does not have the income, assets, or means to pay your tax liability now or in the foreseeable future, you may be a candidate.
Although they evaluate each case based on its own unique set of facts and circumstances, they give the following factors strong consideration:
- The taxpayer’s ability to pay.
- The amount of equity in the taxpayer’s assets.
- The taxpayer’s present and future income.
- The taxpayer’s present and future expenses.
- The potential for changed circumstances.
- Whether the offer is in the best interest of the state.
Generally, they approve an Offer in Compromise when the amount offered represents the most they can expect to collect within a reasonable period of time.
Can they process your application?
They will only process your Offer in Compromise application if you have done all of the following:
- You have filed all of the required tax returns. If you have no filing requirement, note it on the application.
- You have fully completed the Offer in Compromise application, and provided all supporting documentation.
- You agreed with the Tax Board on the amount of tax that you owe.
- You authorized the Tax board to obtain your consumer credit report and to investigate and verify the information you provided on the application.
Do they suspend collection activity?
If delaying collection activity jeopardizes their ability to collect the tax, they may continue with collection efforts. Interest will continue to accrue.Collection activity is not automatically suspended.