Requesting a Compromise

Individual and business tax debt qualifies for a compromise.

Restitution debt does not qualify for a compromise.

If you have debt referred to Revenue, contact the referring agency for more information.

Complete the Compromise Questionnaire and Application. If you are an active business, you must also complete Form C58B - Business Financial Statement. If you cannot print the forms, contact us to request them by mail.

Nonrefundable Application Payment

There is a $250 nonrefundable payment due when you apply. We apply this payment to your debt.

If you cannot afford the nonrefundable payment, we may waive it if you meet at least one of these conditions:

• Your income was less than 200% of the federal poverty level
• You have a financial hardship and are unable to pay for necessities, including utilities, mortgage or rent, or needed medication

Complete the questionnaire stating you meet either of these conditions. If we deny your waiver request, you must make the payment before we review your application.  

Make your check payable to the Commissioner of Revenue.  

You may submit your compromise agreement, additional documentation, and application payment online.

The documentation we request with your application helps us understand your current financial position and determine if a compromise is the best way to resolve the debt.

Verification of Income

Provide complete copies of the two most recent paystubs or earnings statements and the most recent statements from all other sources of income, such as:

• Pensions, disability, and social security
• Rental income
• Current profit and loss statements if you are self-employed or an active business

If you cannot obtain pay stubs from your employer, we will accept recent W-2 or 1099’s.

We review all income to determine funds you have available to pay expenses and debts. You must provide information about your financial situation that includes your gross monthly income and average household expenses.

The household includes you and all other adults who help pay monthly expenses such as, rent, utilities, insurance, and food. See the Compromise Questionnaire and Application or Form C58B - Business Financial Statement for a complete list of what to include.

This information is necessary for us to accurately evaluate your offer. We may also use this to determine your share of the total household expenses.

Verification of Assets

We review all assets you own to determine if you can liquidate any of them to pay your debt. We require complete copies of your three most recent bank statements and the most recent copy of statements for other assets, such as:

• Recent appraisals or property tax bills
• Vehicles or business equipment
• Notes receivable

Verification of Liabilities

We review all liabilities to determine your ability to pay by looking at other required financial obligations against your income. We require complete copies of your three most recent billing statements, such as:

• Statements from lenders showing payments, balances, and recent activity
• Delinquent federal, state, or local tax liabilities

Verification of Household Expenses

You are allowed the standard amount based on the federal and state expense guidelines for housing and utilities. You must show which member of your household pays each expense.

If the amount claimed is more than the guidelines allow, we will need to see complete copies of the most recent documentation to verify they are necessary living expenses.

Expenses include:

• Utility bills
• Insurance bills
• Phone bills
• Vehicle, gas, or parking bills

Other Documentation

You may need to provide additional documents to support your request or allow us to speak to someone helping you. These documents may include:

• A Power of Attorney form if you would like another person, such as an attorney or CPA, to represent you, if you do not have one on file
• Supporting documentation for any additional circumstances or other expense that may prevent you from paying your debt in full, such as any medical expenses, child support, or court ordered payments

We may ask for more documents we believe are necessary. We may verify any information you provide through our records or third-party contacts.

We will send an acknowledgement letter confirming we received your completed application or to request additional information. We will review your completed application within 90 days.

While we review your application:

• We will take no new action to collect the debt
• We may continue any action already in progress when you apply
• We will continue to take state and federal refunds and may file new state tax liens
• Unpaid balances continue to accrue interest

We will contact you by phone and send you a written response of our decision. We may:

• Accept your offer
• Propose a counteroffer
• Reject your offer and request you contact us to discuss the best method to pay your debt

If we accept your compromise offer, we will send you a compromise agreement. You must sign the agreement and pay the agreed amount outlined within 30 days. If you cannot pay within 30 days, you must contact us.

Tax debts that were included in the agreement will be resolved when we receive your final payment.

We may cancel the compromise agreement, disregard the compromise amount, and collect the full amount if: 

• You do not pay on time
• We find the information you provided is inaccurate or incomplete
• You do not file and pay all your tax returns on time for five years after you make the final payment under this agreement

If your compromise application is denied, you may contact the Taxpayer Rights Advocates for a reconsideration.

What happens if I cannot come up with a lump sum payment?

You may be allowed to make payments on the compromised amount. Include a proposal for payments with your application or contact us when your offer is accepted.

If tax liens have been filed, they are not satisfied until all conditions of the compromise agreement are met.

Can I apply for a compromise more than once?

Yes, if we did not accept your previous application and you have new information that supports your offer.