Nevada Department of Taxation

Department of Taxation

Procedures for Requesting an Offer In Compromise During the 73rd Session of the Nevada Legislature in 2005, SB 15 was passed that gave rise to NRS 360.263 which allows the Nevada Tax Commission (NTC) to enter into a compromise with a taxpayer concerning the liability of the taxpayer for any tax, contribution, premium, fee, interest or penalty that the Department has determined is owed. This includes all taxes administered by the Department with the exception of property tax. A compromise is acceptance of an amount that is less than the liability as full satisfaction of that liability. See NAC 360.437 and NAC 360.428. 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. A Waiver of Limitations may be requested by the Department to extend a statute of limitation. 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. At this time the Department does not have a specific form for this purpose. The person will be notified by an employee when the request is received. There are three reasons a liability can be compromised. The revenue officer will first decide, based on the person’s written statement, whether the request is due to doubt as to collectability, doubt as to liability, or based on considerations of equity and fairness. 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 and 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 verification 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 verification 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 petitions 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 liability 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 not named or part of the OIC.
Business Financial Statement.pdf Personal Financial Statement.pdf

Procedures for Requesting an Offer In Compromise

During the 73rd Session of the Nevada Legislature in 2005, SB 15 was passed that gave rise to NRS 360.263 which allows the Nevada Tax Commission (NTC) to enter into a compromise with a taxpayer concerning the liability of the taxpayer for any tax, contribution, premium, fee, interest or penalty that the Department has determined is owed. This includes all taxes administered by the Department with the exception of property tax. A compromise is acceptance of an amount that is less than the liability as full satisfaction of that liability.

See NAC 360.437 and NAC 360.428. 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. A Waiver of Limitations may be requested by the Department to extend a statute of limitation.

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. At this time the Department does not have a specific form for this purpose. The person will be notified by an employee when the request is received.

There are three reasons a liability can be compromised. The revenue officer will first decide, based on the person’s written statement, whether the request is due to doubt as to collectability, doubt as to liability, or based on considerations of equity and fairness.

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 and 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 verification 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 verification 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 petitions 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 liability 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 not named or part of the OIC.

Business Financial Statement.pdf

Personal Financial Statement.pdf