New Jersey 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 New Jersey, you must submit a Closing Agreement request. In addition, you must ensure you are in full compliance and failure to do so will result in your request to be immediately rejected and returned. To review all the terms, visit their website: https://www.state.nj.us/treasury/taxation/pdf/other_forms/special_pro/906.pdf
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:
- Complete and sign Form 906, Closing Agreement
- A copy of the last two years of filed Federal 1040 tax returns.
- 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 New Jersey is they may allow your debt to be closed and thereby removed.
The Cons are if the State rejects your Offer, it is not subject to administrative or judicial review.