Details Regarding Georgia’s Offer in Compromise Program
The State of Georgia offers a formal Offer-in-Compromise (OIC) Program whereby taxpayers can settle for less than they owe. The settlement will include not only the tax owed but also penalties and interest. The DOR administers the program and has specific submission requirements that a taxpayer must meet to qualify.
The Georgia OIC option is very similar to what the federal government offers under the IRS Fresh Start Program . For individual taxpayers, Form OIC-1 and Form CD-14C must be submitted to request a Georgia OIC. In fact, the forms are nearly identical to the tax forms the IRS requires with their OIC program.
Reasons for An Offer in Compromise
Taxpayers have three circumstances whereby they can settle their taxes with the state:
(1) Doubt as to Collectibility
(2) Doubt as to Liability
(3) Economic Hardship
The DOR defines Doubt as to Collectibility as meaning that doubt exists that the taxpayer could ever pay the full amount of tax owed. Furthermore, they will consider Doubt as to Collectibility OIC’s when the taxpayer is unable to pay the taxes in full either by selling assets or through an installment agreement.
The DOR typically sees Economic Hardship status as a way to define a taxpayer who owes the delinquent tax debt, could pay the debt in full, but has demonstrated that if the DOR were to collect the money owed, it would create a significant economic hardship for the taxpayer. The taxpayer must show the DOR that their exceptional circumstances (illness, disability, age, etc.) would make it inequitable to collect the full amount of the tax debt.
GA Offer in Compromise Eligibility
For a taxpayer to be eligible for an Offer-in-Compromise, the taxpayer must meet all of the following conditions:
- Up to date with all required state tax return filing obligations
- Received a final notice of assessment for all state taxes that they owe
- Not the subject of an active or open bankruptcy case.
GA State Offer in Compromise Requirements
Below you will find requirements a taxpayer must meet to submit an Offer in Compromise:
- The taxpayer must maintain compliance with all filing and payment obligations while an OIC request is pending. Moreover, it includes estimated tax payments.
- The taxpayer must complete Form OIC-1 – Offer in Compromise
- The taxpayer must complete Form CD-14C – Collection Information Statement for Wage Earners and Self-Employed Individuals
Required Documents for a GA State Offer in Compromise
The following is a list of documents that the DOR requires with the submission of an OIC application:
- Recent pay stub or earnings statement copies from the taxpayer’s employers
- Copies of the three most current months of bank statements
- List of Notes Receivable, if applicable
- Copies of the most recent statement from any other sources of income. It includes income sources such as rent income, interest income, dividends, Social Security, pensions, rent subsidies, a court order for child support, and alimony
- Schedules of depreciation from your accountant (if applicable)
- Copies of recent investment and retirement account statements
- Copies of recent lender loan statements that show the monthly payment, loan payoff amount, and balances. For example, auto loans, mortgages, second mortgages, home equity loans and so forth.
- Documentation to support any exceptional circumstances described in Section 3 “Explanation of Circumstances” on page 2 of Form OIC-1, if applicable
- Attach a Form RD-1061, Power of Attorney, if applicable, or not currently on file with the DOR
The OIC application, including all required forms and supporting documents, should be mailed via certified mail or through a private delivery service to the Georgia Department of Revenue. The address is:
Georgia Department of Revenue
Offer in Compromise Program
1800 Century Blvd., NE, Suite 9100
Atlanta, Georgia 30345-3209.
Alternatively, taxpayers may upload and submit their OIC Application via their login with the Georgia Tax Center.
The DOR states that the offer amount must equal to, or exceed the minimum offer amount. Specifically, the minimum offer amount equals the net equity of the taxpayer’s assets plus the amount that the DOR projects that they could collect from the taxpayer’s future income.
Georgia law requires that each OIC application include a $100 nonrefundable application fee. The taxpayer must pay the fee via certified check or money order when it is filed. However, the DOR may waive the fee if the taxpayer qualifies for a low-incomewaiver. The Form OIC-1 lists the maximum monthly income amounts to qualify for the waiver. If the application is accepted, then this fee will be applied against the taxes owed.
GA State OIC Review and Determination
The DOR will first conduct an initial review of the taxpayer’s submitted OIC to determine if the application is complete or if additional information or documentation is required. After that, the DOR will conduct an official review and evaluation of the taxpayer’s OIC application. The DOR may contact taxpayers during this phase in the process to request additional documentation or to clarify an item. The review and evaluation of the OIC application will conclude with a recommendation to the State Revenue Commissioner as to acceptance or denial.
The DOR states that merely offering the minimum offer amount will not guarantee the acceptance of an OIC application.
Reasons for Denial
The DOR gives the following reasons/examples for why the state may deny an OIC application, despite the taxpayer having submitted an OIC application offering the minimum offer amount:
- Excess Expenses – The DOR uses national collection financial standards crafted by the IRS to figure out the threshold of expenses allowed for each necessary and living category. DOR will adjust these expenses that exceed the national collection standards to the maximum allowed.
- Inadequate Documentation – The taxpayer must substantiate most items on the financial statement. If the taxpayer does not provide adequate documentation to support income, expenses, and other items determining your financial status, the DOR will deny the offer.
- Omitted Items – If a taxpayer fails to include assets, income, or other essential items on the financial statement, the DOR will reject the OIC application.
- Past Record of Non-Compliance – If DOR finds the taxpayer has a history of not complying with tax laws or willfully not complying with state tax laws, the DOR may reject the OIC.
- Valuation of Property – The DOR will assess the property owned by the taxpayer. If the taxpayer undervalues property listed on the final statement the DOR may deny the OIC application.
- Trust Fund Taxes – If the taxpayer’s delinquent taxes relate to unpaid sales taxes or withholding taxes from employees, the DOR may reject the OIC application if the business is still operating.
- No In the Best Interests of the State – If the State Revenue Commissioner finds the offer is not in the best interests of the state, then the state will not accept the offer. Although the law allows the Commissioner to accept the offer, there is no obligation to do so.
DOR Exceptions to Minimum Offer Amount
On the flip side, the DOR also states that in some circumstances they may accept an OIC application that offers less than the minimum offer amount. Furthermore, they mention that the state may take the minimum offer amount in situations where the submitted OIC application is seeking relief under Economic Hardship conditions. The DOR further states that Economic Hardship circumstances may include factors such as old age, terminal illness, or any other factors that affect the ability for the taxpayer to pay the total minimum offer amount and at the same time pay reasonable living expenses for themselves or their family.
Decision Notification and Next Steps
Once a decision is reached, the DOR will issue a notice to the taxpayer via mail. The notice will state whether the Offer-in-Compromise Application has been accepted or rejected.
If the State Accepts the Offer
If the taxpayer has their Offer in Compromise accepted, the state will notify them by mail. The letter will inform the taxpayer of the due date to send payment (generally 60 days) or under a payment plan agreement. The DOR generally allows a payment plan up to 60 months (5 years). Once the offer amount is paid in full, the state will release any state tax liens related to the state back taxes.
If the State Rejects the Offer
If the DOR believes that an OIC is appropriate, but that the taxpayer can pay more (a counter-offer) they will contact the taxpayer directly. Usually, the taxpayer can accept the counter-offer without submitting more paperwork.
If the taxpayer’s OIC gets rejected and the DOR states it is because their financial analysis indicates that the taxpayer can pay in full, then the DOR will require full payment or payments through an installment agreement.
One Option Where Asking For Help Makes Sense
Because of the complexity surrounding Offers in Compromise, taxpayers should consult with a licensed tax professional with experience with working with the Georgia Department of Revenue. If you would like a consultation and an idea of whether you meet eligibility standards, start your search below and filter by the Georgia Department of Revenue to find top tax professionals that can assist.
Disclaimer: The content on this website is for educational purposes only and does not serve as legal or tax advice. For specific help regarding your tax situation, contact a licensed tax professional or tax attorney.