Massachusetts 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 Massachusetts, as it states on their website, you aren’t eligible if any of the following is true:
- You haven’t filed all state returns.
- You are involved in an open bankruptcy proceeding.
- Your liability is currently being appealed (Abatement, Appellate Tax Board, civil proceeding, etc.).
- You have filed Form DR-1, Request for Settlement Consideration to question the tax liability.
- You have a history of non-compliance
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:
- Form M-656, Offer in Settlement
- Signed copies of the last three years of Federal Tax Returns and all schedules.
- Form M-433-OIS, Statement of Financial Condition and Other Information
- Form OIS/AB, Taxpayer’s Consent
- 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 Massachusetts 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.