- Massachusetts Department of Revenue
Did you know that the Massachusetts Department of Revenue (DOR) can accept a lesser amount than the tax liability owed in certain cases? If you’re thinking about making an Offer in Compromise (Offer), knowing the following will make the process easier.
Keep in mind that DOR may, but isn’t required to, accept an Offer, and you don’t have a right to such a settlement. Also, since DOR doesn’t negotiate on any Offer, you should make your best Offer in your application.
Offer overview
An Offer is an agreement between you and DOR to settle a tax liability for less than the full amount owed. The reasons why DOR might accept an Offer include:
- You’re unable to pay the full liability owed
- There is serious doubt as to whether the tax can be collected
- There is no intent by you to defraud and
- Accepting an Offer is in the best interest of the Commonwealth.
Prepare to make an Offer
To start, we recommend that you review Offer in Compromise Frequently Asked Questions. If you’re eligible, download and complete the Offer in Compromise Application following the instructions.
Basic Eligibility Rules
You must meet Basic Eligibility to make an Offer. If you don’t, any submitted Offer will not be processed, and your case will remain subject to collection activity.
You meet Basic Eligibility if:
- You have filed all required Massachusetts tax returns and reports with DOR.
- You have paid the entire liability of the most recent tax year, or 12 months of tax returns that you were legally required to file.
- You have made all required estimated payments for the current year.
- You have received a final Notice of Assessment for all Massachusetts state taxes that are owed.
- You are not disputing the amount of tax owed or that you are responsible for paying the tax liability.
If Basic Eligibility is met, Offers received will be subject to a thorough Financial Audit.
The submission of an Offer won’t stop DOR's normal collection process until Basic Eligibility is met and a Financial Audit of the application begins.
Interest and penalties will continue to accrue on any unpaid amounts.
How to file an Offer
When filing an Offer, you must include these forms and documents in the Offer in Compromise Application in order for DOR to process the Offer:
- Form M-656 Offer in Compromise Application
- Form M-433-OIC Statement of Financial Condition and Other Information
- Electronic Funds Transfer Authorization Form
- Supporting Documentation
- Refer to the Documentation Checklist in the Application Packet
- Form M-2848 Power of Attorney and Declaration of Representative
- Must be filed if someone is acting as a representative on your behalf.
Initial Payment
An Initial Payment must be included when the application is submitted. The Initial Payment is based on the payment option selected:
- 20% of the Offer amount for a lump sum cash Offer, or
- The first month's payment for an installment payment Offer.
The Initial Payment and any payments received during the Financial Audit:
- Will not be returned if the Offer is rejected or withdrawn, and
- Will be applied against the outstanding liability.
Minimum Offer Amount
The Minimum Offer Amount is a calculated amount that equals the net equity of your current assets, plus a projected amount that could be collected from your future income.
The Minimum Offer Amount must equal or exceed $5,000. In general, the Offer amount should also be at least 50% of the underlying tax liability. Your ability to pay more than the Minimum Offer Amount, as determined by DOR, will result in the rejection of the Offer.
How to submit an Offer
After completing the forms required, email the Offer application to doroicunit@dor.state.ma.us.
If you’re unable to send electronically, applications can be mailed to:
Massachusetts Department of Revenue
Collections/OIC Unit
P.O. Box 7021
Boston, MA 02204
For help completing the application, contact the Collections Bureau at (617) 887-6400.
Offer acceptance
When Basic Eligibility is met, a thorough Financial Audit of the taxpayer’s situation and proposed payment will be conducted by DOR.
Offers require the acceptance of the Commissioner of Revenue, and two Deputy Commissioners. Some Offers require the review of the Massachusetts Attorney General.
If the Offer is accepted, your name, and the amount of the settlement will be published and made public:
- In the DOR Annual Report and
- On the DOR’s website.
