Connecticut 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
The State of Connecticut OIC program is, like some other states, a lot like the IRS program in that much of the same information is required for qualifying.
You will first need to review IP 2004(31), Procedures for Making Offer of Compromise. Like the IRS, you may file under one of three options:
1. Doubt as to liability;
2. Doubt as to collectability; or
3. Doubt both as to liability and collectability.
The State of Connecticut will not accept and OIC based on doubt as to collectability if:
- You have not filed all required Connecticut tax returns;
- You are being criminally prosecuted for a Connecticut tax liability;
- You have begun a voluntary bankruptcy case by filing a petition with the U.S. Bankruptcy Court under Title 11 of the United States Code, and another person has filed an involuntary bankruptcy case against you;
- You have other assets, income, or outstanding liabilities that are not disclosed in the offer;
- The offer relates to taxes that, in DRS’ judgment, reasonably may be expected to be payable, in installments, from future income or future-acquired assets; or
- The offer appears to have been made as a delaying strategy, and collection of the tax is in jeopardy.
Submitting Your Offer in Compromise
The documentation the State of Connecticut requires is the Form CT-656 for business and Form CT-656a for personal taxes. In the instructions is states you must do the following for submission in order for your Offer to be reviewed:
- Complete the entire application. No part of the application can be left blank; therefore, you must write the words No or None where applicable.
- If you need to enter more information than what is on the application, attach additional sheets as needed.
- Each applicant must provide copies of the last two federal tax returns and include supporting schedules, forms W-2, 1099, etc. Additionally, a consumer credit report and two months of paystubs or other proof of income.
- If you filed for bankruptcy within the past five years, you must provide a copy of the discharge notice.
Offer in Compromise Pros and Cons
The Pros of submitting an Offer to the State of Connecticut 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. If your Offer is rejected, you may not submit another Offer for review.