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Last Updated: 9/22/2017

Compromise

A compromise is a written agreement to settle an unpaid tax debt for less than the full amount due. You may offer a compromise on any Minnesota tax debt; we may accept when it is in the state’s best interest to do so. (See Minnesota Statute 270C.52.)

For tax debt from a joint tax return or audit, you may request a compromise together or separately. To make a separate request, you must first apply for a Separation of Liability.

Note: We do not consider the same factors as the Internal Revenue Service (IRS) for compromise requests. We may deny a request for state tax debt even it was approved by the IRS for federal tax debt.

How do I request a compromise?

To request a compromise on your tax debt, submit a Compromise Application.

  1. Complete the Individual Financial Statement (Form C58C) and Compromise Questionnaire. They are included in the application.
  2. Include documents to verify the information you provided. There is a complete list on the application.
  3. Enclose a nonrefundable $250 deposit. We may waive the payment in cases of financial hardship. You must include a written explanation and documentation of the hardship.
  4. Mail your forms, documents, and deposit to us as directed on the application.
  5. Keep a copy of all the information and documents you provided for your records.
Note: To request a compromise on a debt we are collecting for another agency, you must contact that agency.

Do I need to answer every question on the application forms?

Yes. It is important that you fully complete the Financial Statement and Compromise Questionnaire, accurately and honestly. Follow the instructions carefully. We will likely deny your request if the information is not complete, or if we discover you did not disclose all assets or income.

  • We must be able to see where all household income comes from and who is paying the expenses, to assess your ability to pay. This includes members of the household who may not be liable for the tax debt.
  • You must state the maximum amount you can pay for the debt. We only consider offers when they are in the state's best interest. In cases of a financial hardship, you may submit an offer of zero dollars.
  • We require a $250 nonrefundable application payment for each compromise request. We apply this payment to your debt whether or not we accept your compromise request. In cases of a financial hardship, we may waive the application payment.
Note: If you are claiming a financial hardship, you must include a written explanation and documentation of the hardship with the compromise application.

How will you decide on my application?

We consider a range of factors when reviewing your Compromise Application. They include: 

  • your assets, earning potential, age, and health
  • our potential to collect the debt in full
  • who else is liable for the debt (such as a spouse, business partners, or corporate officers)
  • business tax debts and whether:
    • your business remains open
    • the debt is for a trust tax that you hold or collect and then send to us (such as Sales Tax or Withholding Tax)
  • your overall collection history, including any previous collection actions by us
  • how much you have paid towards the debt
  • past or current bankruptcy (if applicable) 

What happens after I submit my application?

  • Once we receive your completed Compromise Application, we will decide on your request and notify you within 90 days. If your application is incomplete, we will contact you for the missing information or missing documents. 
  • We will continue any current or pending collection actions while we consider your request. We may contact you for more information or with questions about what you submitted.
  • We will prepare a written compromise agreement if we accept your request. The agreement does not take effect until all parties sign it (you, the Attorney General, and us).
  • If the Attorney General or we deny a compromise proposal, you may not appeal the decision. You may request a reconsideration by the Taxpayer Rights Advocate.