Arkansas 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 Arkansas informs you should review Rule (Regulation) 2000-4 before submitting an OIC. There is a lot of information, but in short follows the same rules as the IRS. In this State, the OIC’s are reviewed by the Director and you must have filed all required tax returns before submission.
Submitting Your Offer in Compromise
When you submit your Offer in Compromise to the State of Arkansas, it is being reviewed by the Director. The State requires all documents to be submitted with the Offer, or the Director will return your Offer.
Arkansas requires you to use Form 2000 – 4 for submission. It is a total of six pages and the last page is a list of the information they require you to submit with your Offer. Failure to do so will result in your Offer being returned. In addition, this State requires you to complete the Federal Offer in Compromise Form 433-A for Individuals or 433-B for Businesses.
Offer in Compromise Pros and Cons
The Pros of submitting an Offer to the State of Arkansas is they may allow your debt to be compromised and thereby removed.
The Cons are if the Director rejects your Offer, it is not subject to administrative or judicial review. In addition, if you submit a second Offer it will 99% of the time also be rejected.