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OIC Guidelines

9 - Offers in Compromise Regarding Corporate Officer Liability and Successor Liability

A. Corporate Officer Liability

  1. A taxpayer assessed as a responsible person personally liable for the tax debt of an underlying business entity under MCL 205.27a (“corporate officer liability”) may submit an offer in compromise for the tax debt assessed, in accordance with MCL 205.23a and these Guidelines.
  2. An offer in compromise of a corporate officer liability tax debt may only be made with regards to the tax debt as personally assessed against the taxpayer as a responsible person under MCL 205.27a, not to the tax debt as originally assessed to the underlying business entity. The grounds on which an offer in compromise may be made by such taxpayer are limited to doubt as to collectability and doubt as to liability.

    A taxpayer who has been determined to be a responsible person personally liable for the tax debt of an underlying business entity under MCL 205.27a (“corporate officer liability”) may submit an offer in compromise based on doubt as to collectability. The responsible person’s offer will be reviewed based on the doubt as to collectability of that person’s personal ability to pay under the standards set forth in section 2.3 of these Guidelines.
  3. Review and any acceptance of an offer in compromise submitted for a corporate officer liability tax debt based on doubt as to liability is limited to the question of the taxpayer’s personal liability derivative of the tax debt of the underlying business entity. Submission by such taxpayer of an offer in compromise based on doubt as to liability of the tax debt to the underlying business entity will be rejected.
  4. An offer in compromise submitted by a taxpayer regarding a corporate officer liability tax debt will not be rejected merely because the taxpayer did not file the required returns of the underlying business entity for outstanding tax periods. The taxpayer, upon its submission of the offer in compromise, may provide documentation, a sworn affidavit or other sworn statement made under oath, which details the efforts taken by the taxpayer to facilitate or secure the filing of the outstanding returns of the underlying business entity. Treasury may waive the requirement that outstanding returns be filed as a condition of submission of the offer in compromise if it determines from the information provided that the taxpayer made reasonably diligent efforts to facilitate or secure the filing of the outstanding returns.

B. Successor Liability

  1. A purchaser or succeeding purchaser of an ongoing or closed business or its stock goods (“successor”) may submit an offer in compromise for the tax liability of the successor entity established pursuant to MCL 205.27a(1).
  2. A successor that complies with the escrow requirements set forth in MCL 205.27a(1) and where the Treasury was requested to provide and did provide a certificate showing the known or estimated tax liability of the selling entity for purposes of establishing an escrow account for the payment of taxes, the successor’s tax liability is limited to no more than the amount of the known or estimated tax liability disclosed by Treasury and held in escrow. A successor taxpayer in this situation may submit an offer in compromise for the tax debt only on the grounds of doubt as to liability as to the liability of the taxpayer as a successor under MCL 205.27a(1).
  3. An offer in compromise submitted by a successor taxpayer with regard to a tax liability of the taxpayer as a successor under MCL 205.27a(1) will not be rejected merely because the outstanding returns of the seller have not been filed with Treasury.
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