Office of Tax and Revenue: Offer in Compromise

The Office of Tax and Revenue (OTR) will consider an offer to settle unpaid taxes for less than the full amount due when the facts raise doubts about the liability or its collectibility. If a taxpayer makes an offer because of inability to pay, the amount of the offer should reflect their maximum ability to pay. A thorough investigation will be conducted of the value of the taxpayer’s property and their future earning potential before deciding whether to accept the offer.

Instructions for submitting an offer in compromise (Form OTR-10) are available in the Miscellaneous Forms section.

Eligibility Requirements

You have incurred a delinquent tax liability that has resulted in an assessment.
You have exhausted all other avenues of appeal regarding the validity or amount of the assessment.
You are current in the filing of all returns required to be filed.
You are not currently involved in an open bankruptcy proceeding.
You are unlikely to be able to make payment within the statute of limitations (10 years) due to your financial situation.
You either are without resources or unable to apply present and/or future resources to paying the outstanding tax liability.

Process

Once OTR receives an offer in compromise, they will review the offer and determine within 90 days if there is sufficient reason for a reduction or abatement of the assessment.
If OTR determines that no grounds for adjustment exist, the taxpayer will be notified that their offer has been declined. OTR will consider another offer in compromise if circumstances change.
If OTR determines that grounds for adjustment exist but that the amount offered is insufficient, the taxpayer will be advised as to an acceptable amount. If OTR determines that the offer is acceptable, the taxpayer will be notified so payment can be made.

Taxpayers must remain current with respect to their future filings for a minimum of three (3) years after an offer in compromise is accepted. If they do not, the full liability will become due immediately, and OTR will take all necessary action to collect the tax due in full.