Louisiana 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 Louisiana, the Secretary of Revenue, with the written approval of two assistant secretaries and the Louisiana Board of Tax Appeals, may compromise any judgments for taxes of $500,000 or less, as long as the following applies:
a. There is serious doubt as to the collectability of the outstanding judgment.
b. There is serious doubt as to the taxpayer’s liability for the outstanding judgment.
c. The administration and collection costs involved would exceed the amount of the outstanding liability
As always, the State will only process an OIC application if all required tax returns have been filed.
Submitting Your 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:
- A nonrefundable payment of 10% of the offered amount.
- Form 20211, Offer in Compromise Based on Serious Doubt as to Collectability
- 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.
Offer in Compromise Pros and Cons
The Pros of submitting an Offer to the State of Louisiana 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.