Offer in Compromise Program
The Offer in Compromise program allows qualifying, financially distressed taxpayers the opportunity to put overwhelming tax liabilities behind them by paying a reasonable portion of their tax debt. We can consider offers in compromise from:
- individuals and businesses that are insolvent or discharged in bankruptcy
- individuals who are not insolvent or bankrupt when payment in full would create undue economic hardship. (Only individuals may apply for relief based on undue economic hardship. This may include relief from business debts for which an individual is personally responsible.)
We analyze each application to ensure that every taxpayer seeking relief receives full consideration. However, only applicants meeting the qualifying criteria will receive hardship relief, and we will use our discretion to deny any application that isn't in the best interests of other taxpayers or the State. This may, for example, require the applicant to fully pay any trust taxes owed (excluding penalty and interest) in order to reach a compromise.
How to apply
We have updated our publications and forms to include the new provision for undue economic hardship. You may now use Form DTF-4, or Form DTF-4.1 for cases of hardship, as well as for the previously eligible bankruptcy and insolvency cases:
- Form DTF‑4, Offer in Compromise (For Liabilities Not Fixed and Final and Subject to Administrative Review)
- Form DTF‑4.1, Offer in Compromise (For Fixed and Final Liability)
- Form DTF‑5, Statement of Financial Condition and Other Information
Taxpayers seeking hardship relief should include a statement describing the undue economic hardship they would experience, along with any supporting documents, when they file their Offer in Compromise application.
For more information
- Call our Offer in Compromise office
- TSB-M-11(9)C,(9)I,(10)M,(2)MCTMT,(2)R,(14)S, Changes to the Offer-In-Compromise Program