Illinois 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 Illinois OIC program is a bit different than the IRS or other states. In this State, you must file a petition with the Board of Appeals after a final assessment of the tax has been issued.
Therefore, DO NOT complete the Form listed as ICB-1 or ICB-2. Instead, you must submit your request in writing. In the Illinois Department of Revenue Regulations Title 86 Part 210 Section 210.101, Filing a Written Petition, it reads: “A review before the Board of Appeals (Board) shall be commenced by the filing of a written petition. Except as provided in Sections 210.126 and 210.130, no petition shall be filed prior to the time a notice of deficiency or notice of tax liability has become final. A notice of deficiency or notice of tax liability is final when all administrative hearings and proceedings in court to review such assessment have terminated or the time for the taking thereof has expired without such proceedings being instituted. The petition shall be filed in a form prescribed by the Board and shall identify the taxpayer, briefly state the facts of the case, specify the relief requested and the reasons therefor. A memorandum of law may be appended. No other pleading shall be filed.”
As always, the State will only process an OIC application if all required tax returns have been filed.
Submitting Your Offer in Compromise
The documentation the State of Illinois requires is as follows:
- Complete Form BOA-1, Board of Appeals Petition.
- Complete Form BOA-4, Financial Information Statement for Individuals.
- You must submit documents to support your financial statement, such as; bank statements, IRA and retirement plan statements, mortgage statement, life and health insurance policy statements, etc.
- Once all forms are complete and you have gathered all your documents, you must mail to the address listed on Form BOA-1.
Offer in Compromise Pros and Cons
The Pros of submitting an Offer to the State of Illinois 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. In addition, your Offer is reviewed by a Board versus one person.