Doubt as to Collectability Michigan OIC

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.

What Is Doubt as to Collectability?

There are three different types of Offer in Compromise. If you are unable to pay the full amount of taxes owed to State of Michigan, you will want to file an Offer in Compromise – Doubt as to Collectability.

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

Qualifying for Michigan Offer in Compromise

In order to qualify for an Michigan Offer in Compromise, all of the following must apply:
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 – Doubt as to Collectability, you will need to file the following forms.
1) Michigan Department of Treasury Form 5181
2) Michigan Department of Treasury Form 5183 OIC Schedule 2A (for individuals) or Form 5184 OIC Schedule 2B (for businesses)

Amount to Offer

The amount offered needs to be the most that can be expected to be paid from your current assets and income. The IRS standard for calculating this is over a 12-month period. However, the State of Michigan requires a “reasonable” amount of time. There also needs to be no reasonable likelihood of increased income or assets that would allow you to pay a greater amount of the tax debt than the amount offered.

Like the IRS, the State of Michigan uses standards to determine reasonable expenses. Anything over the standards will require documentation showing proof that you owe it, proof that you are paying for it, and proof that you need to have expenses higher than the standard. Based on our previous experience working with the Collection Division, we recommend that you be prepared to provide a lot of documentation.

If Your OIC Is Rejected by the 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.