What is an Offer-In-Compromise?

Am I a candidate for offer-in-compromise?

What does the Department consider an “unjust result under the circumstances?”

What other factors would the Department consider in connection with an offer under “unjust result?”

How can I get an offer-in-compromise application packet?

What is required to submit an offer-in-compromise?

Are forced collection activities suspended?

When should offered funds be submitted?

How long will it take to get a decision on my offer-in-compromise?

Can I make payments on the offered amount?

If my offer is not acceptable, will I be contacted?

If the IRS accepts my offer will the North Carolina Department of Revenue automatically accept my offer?

Do I need to have someone represent me?

Can I get relief from the tax liability by filing bankruptcy?

Can I apply for an offer-in-compromise if I have no funds to offer?

What is an Offer-In-Compromise?

NC Gen. Stat. §105-237.1 authorizes the Secretary of Revenue with the approval of the Attorney General to accept full settlement of a liability for a lesser amount than is due when in their opinion it is in the best interest of the state.

Am I a candidate for offer-in-compromise?

You may be a candidate for offer-in-compromise if you meet 1 of the 5 conditions listed below:

1. There is a reasonable doubt as to the amount of the liability of the taxpayer under the law and facts.
2. The taxpayer is insolvent and the Secretary probably could not otherwise collect an amount equal to or in excess of the amount offered in compromise.
3. Collection of a greater amount than that offered in compromise is improbable and the funds or a substantial portion of the funds offered in the settlement come from sources from which the Secretary could not otherwise collect.
4. A federal tax assessment arising out of the same facts has been compromised with the federal government on the same or a similar basis as that proposed to the State and the Secretary could probably not collect an amount equal to or in excess of that offered in compromise.
5. Collection of a greater amount than that offered in compromise would produce an unjust result under the circumstances.

What does the Department consider an “unjust result under the circumstances?”

There is no statutory definition of “unjust result.” However, the Department considers the intent of the provision to mean that the taxpayer has an ability to pay the full amount due or more than the offer amount but has one or more of the following circumstances:

1. long-term illness or disability that renders the taxpayer incapable of earning a living;
2. liquidation of assets would render the taxpayer unable to meet ordinary and necessary living expenses;
3. taxpayer cannot borrow against assets and enforced collection results are unlikely;
4. personal devastation resulting from a natural disaster or an uncontrollable event;
5. forced collection or ability to pay would not reduce the total tax liability over the statutory period of collection.

These circumstances are not to be considered all-inclusive and/or an automatic acceptance of a submitted offer.

What other factors would the Department consider in connection with an offer under “unjust result?”

Additional factors to be considered:

1. taxpayer does not have a history of non-compliance;
2. taxpayer has not taken deliberate actions to avoid payment of taxes;
3. taxpayer has not encouraged others to refuse to comply with the tax laws.

Level of compliance or non-compliance on its own does not warrant either acceptance or rejection of the offer. Compliance factors must be weighed with the individual facts and circumstances.

How can I get an Offer-In-Compromise application packet?

Download the items listed below or call your Collection Division Office to request a packet be mailed to you.

• OIC Checklist and Form OIC-100
• Form RO-1062 (Collection Information Statement for Individuals)
• Form RO-1063 (Collection Information Statement for Businesses)

What is required to submit an offer-in-compromise?

To submit an offer-in-compromise, complete and return all items listed on the OIC Checklist as well as any additional documentation required by the Department.

Are forced collection activities suspended?

Collection activity is not automatically suspended. Interest and other fees will continue to accrue as required by law. Contact your local Collection Division Office if you have further questions.

When should offered funds be submitted?

You should submit the offered funds when the Department requests them. The funds submitted must be tendered by cashiers check or money order.

How long will it take to get a decision on my offer-in-compromise?

After receiving a completed offer packet, the Department will review your request and generally render a decision within 90 days after receipt. Additional time may be needed if your account is more complex.

Can I make payments on the offered amount?

No. Upon acceptance of the offer, the Department requires payment of the settlement amount in full.

If my offer is not acceptable, will I be contacted?

Yes. You will receive a letter notifying you of the denial. If you have any questions, contact your local Collection Division Office or call 1-877-252-3252.

If the IRS accepts my offer, will the North Carolina Department of Revenue automatically accept my offer?

No. The Department evaluates your offer separately from your IRS offer. You must meet one of the criteria under NC Gen. Stat. §105-237.1.

Do I need to have someone represent me?

Representation is not required. The offer-in-compromise program is available to all taxpayers, whether or not they are represented.

Can I get relief from the tax liability by filing bankruptcy?

For questions concerning bankruptcy, view the bankruptcy page available on this site.

Can I apply for an offer-in-compromise if I have no funds to offer?

No. The Department will not accept a "zero dollar" offer. Your offer must represent the most the Department can expect to collect over a reasonable period of time. In order to qualify, you must meet one of the criteria under NC Gen. Stat. §105-237.1.