Missouri Department of RevenueOffer in Compromise
- What is an Offer in Compromise?
- Who is eligible?
- How do I submit an Offer in Compromise?
- What documentation must be submitted with an Offer in Compromise (Form MO-656)?
- What is the required supporting documentation to be submitted with the Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A)?
- What is the required supporting documentation to be submitted with the Collection Information Statement for Businesses (Federal Form 433-B)?
- When are both the Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A) and Collection Information Statement for Businesses (Federal Form 433-B) required?
- What if I owe for more than one type of tax?
- Is payment required at the time the Offer in Compromise is submitted?
- Can I appeal if the Department rejects my offer?
- Can I submit another Offer in Compromise if the Department rejects my offer?
- If I submit an Offer in Compromise and send payments in, but decide later I would like to stop the Offer in Compromise, will the department refund any of the money submitted?
- Are there special conditions when submitting an Offer in Compromise?
- Are all Offers in Compromise reviewed?
- Where do I send a proposal for an Offer in Compromise?
What is an Offer in Compromise?
An offer in compromise (OIC) is an agreement between a taxpayer and the Missouri Department of Revenue (Department) that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the Department believes that the liability can be paid in full as a lump sum or through a payment agreement.
In most cases, the Department will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). The RCP is how the Department measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. The RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.
Who is eligible?
An Offer in Compromise, when submitted for reason of Doubt as to Collectibility or under Effective Tax Administration - Economic Hardship(a) may be considered only after other payment options have been exhausted. If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements or a loan from a financial institution, that must be explored before an Offer in Compromise can be submitted.
All tax returns in all tax types must be filed before the Offer in Compromise is considered. The Offer in Compromise must include tax due in all tax types. Any delinquency currently under bankruptcy can not be included in an Offer in Compromise.
How do I submit an Offer in Compromise?
You may propose an Offer in Compromise by submitting Form MO-656 to the Missouri Department of Revenue (Department). The offer must include a proposal to pay a sum of money and the reason for the offer. Missouri law provides the following three reasons as a basis for an Offer in Compromise:
- Doubt as to Liability: A legitimate doubt exists that the assessed liability is correct. Possible reasons to submit a doubt as to liability offer include:
1. A mistake interpreting the law was made;
2. The taxpayer’s evidence wasn’t considered; or
3. The taxpayer has new evidence.
- Doubt as to Collectibility: Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the statutory period for collection.
- Effective Tax Administration:
(a) Collection of the full liability will result in severe economic hardship to the taxpayer. If the Offer in Compromise is made for this reason, you must include the Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A) and/or Collection Information Statement for Businesses (Federal Form 433-B).
(b) Regardless of the taxpayer’s financial circumstances, exceptional circumstances include, but are not limited to, instances where the taxpayer’s failure to pay the taxes assessed is the result of circumstances beyond the reasonable control of the taxpayer and is not the result of negligence on the part of the taxpayer or
(c) Instances in which a reasonable person would not expect the assessment based on previous policy of the Department of Revenue or information provided to the taxpayer by the Department of Revenue.
What documentation must be submitted with an Offer in Compromise (Form MO-656)?
- Doubt as to Liability:
Documentation to verify why the tax is not due, for example, if taxpayer was a resident of another state, a copy of the other state return for the year(s) included in the Offer in Compromise, a copy of the other state driver’s license, copies of property/auto insurance, voter’s registration, to verify state of residency. If other reasons are in the explanation, any type of documentation to verify the reasons for not owing the tax. - Doubt as to Collectibility:
Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A) and/or Collection Information Statement for Businesses (Federal Form 433-B) and the documentation these forms require to support the information included on the forms. - Effective Tax Administration:
(a) Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A) and/or Collection Information Statement for Businesses (Federal Form 433-B), and information to verify long term future economic hardship, such as decreased income due to retirement or health problems or future care for a disabled dependent, loss of income due to theft or criminal activity or
(b) Information to verify why return was not filed or paid timely, such as illness (physical or mental), death, natural disasters, theft, fire, etc.
(c) Information to show basis for actions such as documentation of previous department policy.
You may refer to the Offer in Compromise Checklist to ensure all necessary information is included with your offer. Failure to provide the required information will result in denial of your offer.
What is the required supporting documentation to be submitted with the Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A)?
Attachments Required for Wage Earners and Self-Employed Individuals: Copies of the three most recent months of:
- Income-Earnings statements, pay stubs, etc. from each employer, pension/social security/other income, self employment income (commissions, invoices, sales records, etc).
- Banks, Investments, and Life Insurance – Statements for all money market, brokerage, checking and savings accounts, certificates of deposit, IRA, stocks/bonds, and life insurance policies with a cash value.
- Assets- Statements from lenders on loans, monthly payments, payoffs, and balances for all personal and business assets. Include copies of UCC financing statements and accountant’s depreciation schedules.
- Expenses- Bills or statements for monthly recurring expenses of utilities, rent, insurance, property taxes, phone and cell phone, insurance premiums, court orders requiring payments (child support, alimony, etc), other out of pocket expenses.
- Other- credit card statements, profit and loss statements, all loan payoffs, etc.
- A complete copy of the your most recent federal return filed.
- Additional information or proof may be subsequently requested.
What is the required supporting documentation to be submitted with the Collection Information Statement for Businesses (Federal Form 433-B)?
Copies of the three most recent months of:
- Banks and Investments-Statements for all money market, brokerage, checking/savings accounts, certificates of deposit, stocks/bonds.
- Assets-Statements from lenders on loans, monthly payments, payoffs, and balances, for all assets. Include copies of UCC financing statements and accountant’s depreciation schedules.
- Expenses-Bills or statements for monthly recurring expenses of utilities, rent, insurance, property taxes, telephone and cell phone, insurance premiums, court orders requiring payments, other expenses.
- Other-credit card statements, profit and loss statements, all loan payoffs, etc.
- Copy of the last income tax return filed: U.S. Corporate Income Tax Return (Form 1120), U.S. Return of Partnership Income (Form 1120S), U.S. Return of Partnership Income (Form 1065), U.S. Individual Income Tax Return (Form 1040), Return of Organization Exempt from Income Tax (Form 990), etc.
- Additional information or proof may be subsequently requested.
When are both the Collection Information Statement for Wage Earners and Self-Employed Individuals (Federal Form 433-A) and Collection Information Statement for Businesses (Federal Form 433-B) required?
Both forms are required when there is a sole proprietor, self employed wage earners, or individuals required to file Missouri Corporation Income Tax Return (Form MO-1120, Missouri S Corporation ( Form 1120S), U.S. Return of Partnership Income (Form 1065), U.S. Individual Income Tax Return (Form 1040), Return of Organization Exempt from Income Tax (Form 990).
What if I owe for more than one type of tax?
If you owe for more than one tax type, send one Offer in Compromise listing all tax debts. All required tax returns need to be filed.
Is payment required at the time the Offer in Compromise is submitted?
Payment is not required unless the Offer in Compromise is accepted and should be made according to the terms agreed upon in Step Four of Offer in Compromise. Payments sent with the Offer in Compromise will be applied to the account the Offer in Compromise was submitted for, however, acceptance of the payment does not constitute or establish acceptance of the Offer in Compromise.
Can I appeal if the department rejects my offer?
No. The law does not provide a right of appeal for a rejected OIC.
Can I submit another Offer in Compromise if the Department rejects my offer?
Yes, the taxpayer does have the option of submitting another OIC if the previous offer was denied.
If I submit an Offer in Compromise and send payments in, but decide later I would like to stop the Offer in Compromise, will the Department refund any of the money submitted?
Offer in Compromise payments are non-refundable according to RSMo, Section 32.378:2(1).
Are there special conditions when submitting an Offer in Compromise?
The special conditions are listed on the Offer in Compromise, Step 3 Terms and Conditions. It is very important that these requirements are understood before submitting the offer.
Are all Offers in Compromise reviewed?
Yes, however an offer will be rejected if:
- The offer is not considered to be fair and reasonable to other taxpayers and the Department.
- If any part of the application is incomplete, or any required documentation is not attached.
- If there are noncompliant filings in any tax type.
Where do I send a proposal for an Offer in Compromise?
An OIC may be submitted to the address on the balance due notice.
Corporate Income, Sales/Use, and Withholding Tax:
Collections EnforcementP.O. Box 1646
Jefferson City, MO 65105-1646
Individual Income Tax:
Personal TaxP.O. Box 385
Jefferson City, MO 65105-0385