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Eligibility

Eligibility

Eligible vs Ineligible Application

If your OIC application is eligible for review, you met the basic criteria outlined in the Guidelines for submission, and you will receive a notice of acknowledgment. Any collection actions will be suspended, such as levying against property or assets while in review.

If your OIC application is incomplete, you did not meet the basic criteria outlined in the Guidelines for submission, and you will receive an Explanation of Ineligible Offer in Compromise Submission. Collection activity will continue.

Submitting an Eligible Application

Prior to Submitting an Eligible OIC Application

  • The taxpayer must have filed all returns for all outstanding tax periods; 
  • The taxpayer’s appeal rights must have expired (the ability to appeal at an informal conference or contest the debt in front of a Michigan Tax Tribunal or court);
  • The offer must not be submitted solely to delay collection activity (such as a levy); and
  • There is not an open bankruptcy.
 

Criteria for Submitting an Eligible OIC Application

Complete the appropriate form depending upon the offer type you are applying for. Be aware, there may be different forms for an open business, closed business, or individuals.

If you are filling out a doubt as to liability application list all assessments you are requesting compromise on. If you are unsure of what your assessment numbers are, please submit an inquiry on the Collections eService or call 517-636-5265.

 

Sign the application, regardless of whether you have an authorized representative or power of attorney completing an application. All liable parties must also sign the application, including:  

  • a representative with authority to act on the taxpayer’s behalf (businesses);
  • a personal representative, administrator, executor, or other authorized fiduciary of the estate (for deceased, incapacitated, or legally deemed incompetent individuals). Proof must be submitted, such as: 
    • a durable power of attorney, 
    • order of guardianship,
    • letter of authority from a probate court, or 
    • other legal documentation; 
  • a third-party designee (legally competent individuals).

Include an initial payment with the application, totaling no less than $100 or 20% of the offer – whichever is greater.

The initial payment is: 

  • non-refundable and cannot include expected refunds, funds attached by levy, or any other amount paid prior to the submission of an OIC;
  • applied to the balance – regardless of acceptance, rejection, or if your submission was incomplete and considered ineligible;
  • paid by:
    • check or money order made payable to the “Michigan Department of Treasury-Offer in Compromise” with the collections account number and all assessment numbers on the check, or
    • debit or credit card payment through Collections eService. If you are making a debit or credit card payment online, ensure you have checked the box on Form 5181 “I have made an online payment”.

Examples (your offer amount should be the most you can expect to pay): 

  • If you offer $100 to compromise your debt, you must submit an initial offer payment of $100 with your application.
  • If you offer $300 to compromise your debt, you must submit an initial offer payment of $100 with your application. $100 is greater than 20% of $300.
  • If you offer $1,000 to compromise your debt, you must submit an initial offer payment of $200 with your application. 20% of $1,000 is $200 which is greater than $100.