Accepted IRS OIC Michigan Offer in Compromise

Like the IRS, the State of Michigan is now able to reduce taxes for less than the full amount. This program is called Michigan Offer in Compromise.

Accepted IRS Offer in Compromise (OIC)

There are three different types of Offer in Compromise. If the IRS has already accepted an Offer in Compromise to settle your IRS taxes and you also owe taxes to the State of Michigan, you may request a Michigan Offer in Compromise based on Grant by the IRS of Federal Compromise.

If you don’t think you qualify under IRS approved OIC, you may qualify under the other two types: Doubt as to Collectability or Doubt as to Liability.

The Reason for IRS Acceptance Must Continue

The reason for the IRS’s acceptance of your Offer in Compromise must continue to exist at the time you submit your Michigan Offer in Compromise. If the federal OIC was accepted based on collectability, the hardship must still exist. If the federal OIC was accepted based on doubt as to liability, the doubt must continue to exist. If the federal OIC was accepted under Effective Tax Administration, the reason must continue to exist. The IRS OIC must be for the same tax periods as the state assessments, and it is limited to tax liabilities for individual income tax and corporate income tax.

Qualifying for Michigan Offer in Compromise

In order to qualify for an Michigan Offer in Compromise, you must meet all of the following criteria:
1) All of your tax returns are filed
2) All balances owed are assessed to you
3) Your opportunity to contest the tax debt in informal conference and appeals has expired
4) You do not have an open bankruptcy case

Required Forms

In order to prepare a Michigan Offer in Compromise – IRS approved OIC, you will need to file the following forms.

1) Michigan Department of Treasury Form 5181 and
2) Michigan Department of Treasury Form 5182 OIC Schedule 1 Information Supporting a Request for a Michigan Offer in Compromise Based on Receipt of a Federal Offer in Compromise.

Amount to Offer

The amount offered needs to be either $100 or 20% of your offer, whichever is greater.

Rejected by State of Michigan

If your Offer in Compromise is rejected, you will have the opportunity to request an independent administrative review by filing a written request on Form 5186 Request for Independent Administrative Review of Rejected Offer in Compromise within 30 days after receiving rejection letter.