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Requesting a Compromise

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A compromise is a written agreement to settle a 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.

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How to Request a Compromise [+]

To request a compromise on your tax debt, submit a Compromise Application. The application includes an Individual Financial Statement and a Compromise Questionnaire. If you are an active business, you must also submit a Business Financial Statement.

It is important to fully complete the application accurately and honestly. We will deny your request if the information is not complete or if we discover you did not disclose all assets or income.

You must show where all household income comes from and who pays the household expenses. This includes members of the household who may not be liable for the tax debt.

You may submit an offer of zero dollars in cases of financial hardship. If you claim financial hardship, you must include a written explanation and documentation of the hardship.

We require a $250 nonrefundable application payment for each request. We apply this payment to your debt whether or not we accept your request. We may waive the payment in cases of a financial hardship.

Note: We will not compromise on a debt we are collecting for another agency. You must contact that agency to request a compromise.

What Happens After You Request a Compromise [+]

We will review your application and notify you within 90 days of our decision. We consider a range of factors, including:

Your assets, earning potential, age, and health
Our potential to collect the debt in full
Who else is liable for the debt (spouse, business partner, or corporate officer)
Business tax debts and whether:
- Your business remains open
- The debt is a tax you hold or collect and send to us (Sales Tax or Withholding Tax)
Your history of collection actions with us
How much you have paid towards the debt
Past or current bankruptcy

Any current or pending collection actions will continue while we consider your request.

We will prepare a written compromise agreement if we accept your request. The agreement does not take effect until all parties sign it.

If your compromise proposal is denied, you may not appeal the decision. You may request a reconsideration through the Taxpayer Rights Advocate.

Requesting a Compromise

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