Indiana Offer in Compromise: What You Need to Know
An Offer in Compromise is an agreement between you and the State Government to settle your back taxes for less than you owe.
An Offer in Compromise is strictly based on numbers; basically, your income versus your expenses and the equity in your assets.
If you can prove to the State you do not have the ability to pay back your taxes in full before the Statute of Limitations expires, then you may be eligible to file an Offer in Compromise. However, it will depend on your Reasonable Collection Potential and how much time is left before Statute of Limitations on the debt expires.
Qualifying for an Offer in Compromise
To qualify for an OIC with the State of Indiana:
- Taxpayers who are facing financial difficulties
- Taxpayers who have a terminal and/or critical illness within the immediate family
- Taxpayers who have experienced personal devastation resulting from a natural disaster or an uncontrollable economic event.
As always, the State will only process an OIC application if all required tax returns have been filed.
Submitting Your Offer in Compromise
The State of Indiana OIC program requires you complete a Form FS-OIC, State Form 50112. This is their Financial Statement for Offer in Compromise.
Much like the IRS and other states, you must submit all required supporting documents and failure to do so will result in your Offer being rejected. Their list of documents includes:
- Income – Copies of paystubs, earnings statements, Social Security Administration benefit letters, pension statements, bank statements reflecting direct deposits, etc.
- Expenses – Copies of Utility statements, credit card or loan billings, medical bills, etc.
- Accounts – Copies of all statements for bank, retirement, and investment accounts.
- Submit a Letter of Circumstance explaining in detail what prevented you from paying taxes when they were due, what is currently preventing you from entering into a payment plan and where will you be obtaining the funds to pay your Offered amount.
Offer in Compromise Pros and Cons
The Pros of submitting an Offer to the State of Indiana is they may allow your debt to be compromised and thereby removed.
The Cons are if the State rejects your Offer, it is not subject to administrative or judicial review.