Skip to main content

OIC Guidelines

Overview of Offer in Compromise Program

An Offer in Compromise is a request by a taxpayer for the Michigan Department of Treasury (Treasury) to compromise an assessed tax liability for less than the full amount. An assessed tax liability includes tax and any related interest and penalty. The Treasury Offer in Compromise program is established pursuant to Public Act (“PA”) 240 of 2014, which amended the Revenue Act, PA 122 of 1941.

A taxpayer may submit an Offer in Compromise if one or more of the following grounds exist:

  1. The taxpayer has received an Offer in Compromise from the Internal Revenue Service for the same tax periods and tax types for which the taxpayer is requesting state relief. Only tax debt for individual income tax, under MCL 206.1 to 206.532, withholding tax, MCL 206.701 to 206.713, , and/or for corporate income tax, under MCL 206.601 to 206.699, is eligible for compromise under this ground. Taxes not imposed by the Internal Revenue Service are not subject to compromise under this ground. For example, the Federal government does not impose a sales tax. Consequently, Michigan Sales Tax is not an eligible tax under this ground.
  2. A doubt as to the collectability of the tax debt exists. The taxpayer must show both:
    1. The amount offered is the most that can be expected to be paid or collected from the taxpayer’s present assets and income; and
    2. The taxpayer does not have reasonable prospects for acquiring increased income or assets that would enable the taxpayer to pay a greater amount of the tax debt than the amount offered, within a reasonable period of time.
  3. A doubt as to the liability for the tax debt exists. Based on a review of evidence provided by the taxpayer, Treasury must determine that the taxpayer would have prevailed in a contested case if the taxpayer had appealed the assessment.

The State Treasurer has given certain divisions within Treasury authority to accept or reject an offer in compromise. Treasury may accept an offer in compromise with conditions. For instance, an accepted compromise requires a taxpayer to make timely payments under a payment plan, when applicable, and requires timely filing of future tax returns. If a taxpayer does not comply with the conditions, the compromise may be revoked and the entire tax debt may be reinstated. Treasury may then take actions to collect the full reinstated tax debt.

Under the Offer in Compromise program, Treasury may compromise all or part of any outstanding tax debt that is subject to administration under the Revenue Act.

Previous  |  Next