30 Aug 20

NYS Offers in Compromise Tax Lawyers

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Last Updated on: 5th August 2023, 03:52 pm

An offer in compromise is a binding agreement where New York state agrees to accept less than the full amount of tax, interest, and penalties due. This is something our NYS Offers in Compromise Tax Lawyers can help with.

If you owe tax debt in NY, you could qualify for the NYS OIC – offer in compromise. In this situation, New York state lets you clear your tax debt for less than what you owe. Both businesses and individuals can apply. It’s great if you can’t afford monthly payments on an installment payment agreement. The Department of Tax and Finance provides this option to taxpayers struggling financially.

If you believe your tax liability is incorrect, that’s another situation where this can also apply.

NYS Offer in Compromise Reasons  | NYS Offers in Compromise Tax Lawyers

NYS accepts offer in compromise for one, or both, of the following reasons

  • Doubt as to liability
  • Doubt as to collectibility, or individual taxpayer would experience undue hardship if she/he had to pay in full

Doubt as to liability

This is a situation where the state is not sure if you owe the funds or not. This can happen in a number of situations. It can include situations where the state refused to proceed the amended tax return. It can also be for situations where the state made incorrect changes to your tax return.

Doubt as to collectibility

This is where the state believes it simply will not be able to get the funds from you. It’s where the collection in full would cause economic hardship. This only applies to individuals, not businesses.

Undue economic hardship is where you cannot afford basic expenses. Reasonable expenses mean things like food, clothing, housing. It can also include things like utilities, transportation, so forth – basic necessities. In other words, expenses which support your health, welfare, and your family.

NY state uses the IRS’s financial standards as a reference for determining allowable living expenses. The state of NY accepts most reasonable expenses

When determining doubt as to collect, DTF considers the following items

  • Taxpayer age, employment history, current employment status, ability to earn
  • Total # of dependants, ages, health
  • Cost of living in the area
  • Situations like special education expenses, medical catastrophes, etc

NY State also looks at the following factors

  • Is there a family member, or is the taxpayer, suffering from a disability, or long-term illness
  • Whether all the monthly income is spent on caring for a dependent

Eligibility Requirements | NYS Offers in Compromise Tax Lawyers

Individuals, and businesses, have to meet certain criteria in order to be eligible for an NYS offer in compromise. You be insolvent, or bankrupt, or paying in full must create undue economic hardship. If NY state believes that the offer undermines tax compliance, then it won’t work with you. In other words, the state will only approve offers that don’t undermine its authority. If you have a history of noncompliance, it won’t approve it.

The state only allows one proposal for a tax debt from a particular period.

What You Need to Understand

Here are some points you should understand before submitting your offer in compromise in New York

  • Submitting the OIC doesn’t automatically suspend collection of a warrant
  • Submitting an offer doesn’t change the time you have to respond to the assessment
  • The statutory period of collection is suspended while the offer is in the pending status, and for a full year afterward
  • You have to file all tax returns, and pay all tax owed for five years after the offer is accepted
  • If you qualify for any refunds, or credit, then the state applies those to your tax debt
  • You have to provide a collateral agreement to the state. This is where you agree to pay more than the offer, if you get extra income.
  • If you submit an OIC for trust taxes on behalf of a business, then responsible individuals in the business could be still held personally liable.
  • If the tax bill is over $100,000 then a NY Supreme Court judge has to approve the OIC.

Common reasons for an NY offer in compromise to be rejected

Here are some common reasons for rejections

  • Taxpayer isn’t insolvent
  • Your application doesn’t prove that paying in full will cause undue hardship
  • The state thinks it can get more from you by taking legal action
  • The application has false information
  • there is evidence you transferred assets after learning about tax debt
  • You didn’t make a good faith effort to pay the debt
  • The tax debt is related to a crime
  • There are many other reasons….

Consider speaking to a NY offer in compromise attorney 

Consider speaking to our NY offer in compromise lawyer today.