Department of Taxation
REQUEST FOR OFFER IN COMPROMISE
These regulations were passed by the NTC to administer the processing of a taxpayers' Offer in Compromise (OIC). During the period of time the Department is processing the OIC the Department will not take any further collection activity on the debt that is included in the offer until the NTC has accepted or rejected the offer. However, as part of the application process the Waiver of Limitations must be signed and submitted by the person making the request consenting to suspend any and all statutory periods of limitation relevant to the collection of the liability pending acceptance or rejection of the offer. Below is the OIC application that includes further explanations.
An OIC will only be considered if the request is made in writing and includes a detailed explanation as to why a person is requesting the compromise. The person will be notified by an employee when the request is received.
There are three reasons a liability can be compromised:
1. Doubt as to Collectability
These requests are from someone who feels they are unable to pay the full amount. The Personal Financial Statement and Financial Information Statement for Businesses if the business is ongoing must be completed to process these requests. The person will be given 30 days to complete the form and submit the documents with all their verification to the Revenue Officer. If the completed forms are not submitted in 30 days the Revenue Officer will inform the person in writing that further collection activity will continue an no further processing of the offer can be done without the information. If the form is submitted timely but is not properly completed or all the verification not attached, it will be returned to the person with a written explanation of the deficiencies. The forms are considered complete when all the sections are either completed or are not applicable (N/A) and the verifcation required by the forms is attached for the prior 2 or 3 months.
2. Doubt as to Liability
The person may request a compromise because they do not believe they owe the total amount of the liability. The person must describe in their written request why, in their judgment, they do not owe the tax liability and offer the correct amount of tax, penalty and interest owed instead. With this type of request the financial statements and verifications are not required; however, verification of the person's circumstances including why they could not timely petition the assessment will be required. The person has 30 days to submit this verification. If the NTC has previously made a decision on the liability in question or the person has not exhausted their administrative petition rights provided by statute, the OIC will not be processed.
3. Consideration of Equity and Fairness
These are typically hardship situations but not necessarily financial hardships. There may be exceptional circumstances present that either caused a person not to pay the correct amount of tax or payment of the full amount of the tax would create a hardship or would be unfair and inequitable. The financial statements and verification may be required with these requests depending on the exceptional circumstances present. Verification must be provided to support the exceptional circumstances within 30 days.
Acceptance of an OIC may depend on the person's history of compliance with all applicable requirements in other instances besides that which caused the liability the taxpayer is wanting to compromise. The person must first exhaust their administrative petition rights before an offer is made. The NTC may accept an OIC that includes an installment agreement.
Once a liability has been compromised the person's debt is considered paid in full, however the NTC may enter into an OIC and still be able to collect the rest of the liability from any liable person named or part of the OIC.