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OIC Guidelines

Ineligible Offer in Compromise

Treasury will review all offer in compromise submissions to determine eligibility.

  1. An offer in compromise may be ineligible for review if one or more of the following exist(s):
    1. The required initial offer payment is not included with the offer in compromise submission.
    2. The initial offer payment amount is insufficient, i.e., less than the greater of $100 or 20% of the offer.
    3. The offer in compromise submission is incomplete and does not provide all required documents and information required by Form 5181.
    4. There is an open bankruptcy proceeding associated with the taxpayer.
    5. The taxpayer does not provide the requisite signature. Each taxpayer who is party to the offer in compromise must personally sign Form 5181.
    6. No offer amount is listed on Form 5181.
    7. The taxpayer does not respond to Treasury’s request for additional information needed to complete the review.
    8. There are computed assessments:
      1. The taxpayer has not submitted required returns for outstanding tax periods. An exception to this is where the taxpayer is personally assessed as a responsible person for the underlying tax debt of a business entity under MCL 205.27a or the taxpayer is a successor to the underlying tax debt under MCL 205.27a. Refer to 1.8 of the Guidelines for when this exception may apply.
    9. The taxpayer has not yet been assessed for the tax liabilities specified in the offer in compromise.
      1. The taxpayer has not yet filed all returns and/or all returns have not been processed and tax liabilities assessed.
    10. For a taxpayer that is incapacitated, deemed legally incompetent, or deceased, proof of authority (as discussed in 1.2.4.f., above) to act on behalf of the taxpayer or the taxpayer’s estate has not been received.
    11. The taxpayer entered into an Audit Closing Agreement, which waives the taxpayer’s right to submit an Offer in Compromise.
    12. The period in which to contest the tax debt, including Treasury’s informal conference process and any appeal to the Michigan Tax Tribunal, or court of competent jurisdiction has not expired in the case of an offer in compromise based on doubt as to liability.
    13. The tax type is not subject to administration under the Revenue Act (Public Act 122 of 1941).
    14. There has been no tax debt assessed by Treasury or the balance of the tax debt has been paid in full.
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