Offer in Compromise

State

Can you imagine what it must feel like to owe an insurmountable amount to the a State Tax Authority, and have that debt vanish overnight? It’s a magical thing. Some states offer programs very similar to the IRS version, which is a formal program to settle a debt for less than what is owed. We’ve settled hundreds of Offers in Compromise with the federal and state tax authorities, and we’re happy to evaluate if you may qualify for a settlement. Please schedule a free 15-minute consultation or call us today.

Questions?

Are State Offers easier than submitting an Offer application with the Feds?

Like most state services, it will depend on your state and your individual facts and circumstances. The California Franchise Tax Board (FTB) has a program which is very similar to the Feds and where we’ve seen the most success in the hundreds of Offers we’ve submitted to the FTB. The New York Department of Taxation and Finance (DTF), however, has an Offer program, but it is completely different than the Federal version. Whereas the IRS will allow an entire debt to be compromised through their Offer program, the DTF only allow penalties to be removed with a successful Offer. Not every state has an Offer program, unfortunately, so please reach out if you’d like help determining what is available for your state tax debt.

Do I need to get an Offer in Compromise accepted with the IRS before submitting one to a State Tax Authority?

For some states, it is 100% a requirement that you get an Offer approved by the IRS before you can even apply to have your debt compromised by a state taxing authority. Some states require a copy of the application submitted to the Feds, but do not require its acceptance prior to submission. It’s very rare that a taxpayer will only owe federal taxes or only state taxes—usually if a taxpayer accrues with the Feds they are also accruing with the state. So it makes sense, if your state has an Offer in Compromise program, to submit Offers to both the state and federal taxing authorities. And typically any state Offer will be bolstered with an approved IRS Offer, so it’s generally a good idea to submit to IRS first and see what they say before sending an Offer to compromise with a State Tax Authority.

What if I owe more than one state—should I send an Offer in Compromise application for each state tax debt?

Sometimes it makes sense to pay one state off and submit an Offer to another state because the state tax enforcement agencies vary so widely. The numbers may work on one state’s financial form, but be completely inapplicable for another state. Having submitted an Offer in every state that allows applications (and a few that don’t), we can easily say that no Offer program is the same and they have more differences than similarities. It may make sense to send an Offer for you personally, but not your business; or for your spouse, but not for you. Please reach out today if you’d like help evaluating if an Offer in Compromise is right for your state debt.