Offer in Compromise
The Department is authorized to consider an Offer in Compromise under Section 32.378, RSMo. An Offer in Compromise allows qualifying taxpayers an opportunity to settle unpaid tax accounts for less than the full amount that is owed. The goal of the Offer in Compromise program is to resolve a liability in a way that is in the best interest of both the State of Missouri and the taxpayer.
If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements that the taxpayer must explore before submitting an Offer in Compromise.
An Offer in Compromise, when submitted for reason of Doubt as to Collectability or under Effective Tax Administration - Economic Hardship (a) may be considered only after all other payment options have been exhausted. To be considered eligible, you must:
(a.) Be fully filed on all tax returns for all required tax periods and tax types;
(b.) Not have an open bankruptcy proceeding;
(c.) Be current on all estimated tax payments if you are required to make estimated tax payments.
An Offer in Compromise, when submitted for reason as Doubt as to Liability, may be considered when a legitimate doubt exists that the assessed liability is correct.
To learn more about a variety of resources and services available, visit the tax relief resources page.
You may propose an Offer in Compromise by submitting the appropriate 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:
- The taxpayer disputes the existence or amount of the correct tax liability;
- The taxpayer’s evidence wasn’t considered; or
- 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:
- Collection of the full liability will result in severe economic hardship to the taxpayer.
- 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
- 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.
Doubt as to Liability:
You must provide sufficient documentation to establish that there is substantial doubt regarding your liability and reasonable cause for failure to produce such documentation earlier in the collection process.
Doubt as to Collectibility:
The taxpayer must submit all required documents and information on the Offer in Compromise checklist.
Effective Tax Administration:
- The taxpayer must submit all required documents and information on the Offer in Compromise checklist and information to verify long-term future economic hardship, such as decreased income due to retirement, health problems, or future care for a disabled dependent, loss of income due to theft or criminal activity.
- Information to verify why return was not filed or paid timely, such as illness (physical or mental), death, natural disasters, theft, fire, etc.
- Information to show basis for actions such as documentation of previous department policy.
You may refer to the Offer in Compromise Checklist, page 2 of the Form MO-656, to ensure all necessary information is included with your offer. Failure to provide the required information will result in denial of your offer.
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.
Payment is not required unless the Offer in Compromise is accepted. 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.
No. The law does not provide a right of appeal for a rejected OIC.
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 Section 32.378:2(1) of the Missouri Revised Statutes.
The special conditions are listed on the Offer in Compromise application under the Terms and Conditions. It is very important that these requirements are understood before submitting the offer.
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, misleading or any required documentation is not attached.
- If there are noncompliant filings in any tax type.
- A settlement agreement had been reached previously reached. This includes an approved Offer in Compromise or a granted abatement request.
PO Box 1646
Jefferson City, MO 65105-1646
Fax: (573) 522-3218