Skip to main content

State of Colorado Offer in Compromise Program

In order to get the State of Colorado to accept an Offer in Compromise on your back taxes you will first need the IRS to approve one for the same tax periods.  Which makes sense.  Most states will strongly consider the acceptance of an Offer in Compromise once the IRS has agreed to one for the same periods.  Taken from the Colorado Department of Revenue's site (original site: here)

Offer in Compromise of Tax Liability

Under certain circumstances the Department may accept a taxpayer's offer to settle their tax liability for less than the full amount due. Taxpayers who meet the following qualifications may initiate the process by submitting the documentation listed below. The taxpayer bears the burden of establishing the grounds for a potential settlement and has no legal entitlement to have any tax liability settled through an Offer in Compromise. Any submitted offer must reflect the taxpayer's maximum capacity to pay. The Department reserves the right to conduct an independent examination of the taxpayer's financial condition in review of the documentation submitted to determine the veracity of the information contained therein. Any previously initiated collection activity will continue while a submitted offer is being considered. The State may rescind any acceptance of an offer if the taxpayer fails to comply with the required terms and conditions, if additional information becomes available or if the information provided by the taxpayer is found to be false.

The Department will only consider a submitted Offer in Compromise if the following criteria are met:
  • All required tax returns have been filed through the current period.
  • The IRS has already accepted an Offer in Compromise covering the same years and liabilities.
  • The State has not previously accepted an Offer in Compromise from the taxpayer to cover prior liabilities.
  • The taxpayer has not previously received tax relief such as a tax liability discharged through bankruptcy, an innocent spouse relief or any prior settlement.
  • The taxpayer cannot be reasonably expected to satisfy all outstanding delinquencies within the period for collection as prescribed by Colorado Revised Statute 39-10-101 (2)(b).
Required Documentation
The following documentation must be included with the submission of an Offer in Compromise. Failure to include any of the following documentation will preclude the Department from considering the submitted OIC.
  • IRS Form 656
  • IRS Form 433 "Collection Information Statement for Wage Earners and Self-employed Individuals"
  • Verification of IRS acceptance of a submitted Offer in Compromise
  • Proof of payment for IRS Offer in Compromise
  • An IRS "Record of Account"
  • Any other relevant information pertaining to the Offer in Compromise agreement with the IRS
  • The Department's financial form "Statement of Income and Expenses" (DR 6596).
  • A written statement detailing the circumstances that warrant special consideration for an Offer in Compromise as well as the amount being offered.
  • Written disclosure of any transfer of real or personal property such as vehicles, cash or title transfer of property.
  • Written disclosure of marital and filing status.

Acceptance and Payment

If an offer of settlement is extended, the taxpayer will be notified in writing and payment must be remitted in full within 15 days from the date of notice to the taxpayer, unless specifically stated otherwise by the Department. No payment plans are allowed for less than the full taxes, penalty, and interest due. If a payment is made and the bank does not honor the check, the Department will rescind the offer in settlement and the full tax liability including penalty and interest will be due.

Any overpayment of taxes for the following three years will be retained by the Colorado Department of Revenue and applied to the tax debt. The taxpayer may not reduce quarterly estimated payments or the amount of withholding during this time.

Popular posts from this blog

Keys to a Successful Offer in Compromise | Nicholas Hartney, EA | Genesis Tax Consultants, LLC ©

Keys to Unlock a Successful Offer in Compromise ©by Nicholas Hartney, EA © of Genesis Tax Consultants, LLC©*Updated Article 2018 Here
Contact me: Nicholas Hartney Licensed to Represent Taxpayers Before the IRS 
The Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s liability for some amount which is less than the full amount due. The IRS has the authority to settle or compromise federal tax liabilities by accepting less than full payment under certain circumstances.

The taxpayer makes an Offer in Compromise on Form 656. If the IRS accepts the Offer in Compromise, then a contract is formed in which the IRS agrees to cancel the tax debt in return for the payment of the agreed sum. The IRS has a whole set of rules, policies and procedures which govern when it will accept an offer.

Unfortunately, you just don’t offer to pay them 10, 25, or 50 cents on the dollar. They look at your offer, compare it to their guidelines and then either accept it, rej…

2010 IRS Nationwide Tax Forum San Diego Review

The 2010 IRS Nationwide Tax Forum was nicely set up and had some great presentation speakers.

Some of the highlights discussed from the forum:
There were almost one million federal tax liens filed in 2009.The National Taxpayer Advocate's Office discovered that federal tax liens drop your credit score 100 points as soon as they are filed.  The investigation also found that the three major reporting credit agencies, Experian, Equifax, and Transunion, do not remove tax liens for years, if at all, even after the tax has been paid.  The Fair Credit Reporting Act allows the agencies to keep the lien on your credit report for up to 7 years after payment in full.  Regardless of this Act for some reason the investigation found that Equifax keeps liens on your report for up to 15 years, Experian keeps the liens on your report for 10 years, and TransUnion indefinently!  Federal Tax Lien filings went up 475% over the past 10 years.Bankruptcy on back taxes are dischargable in a bankruptcy 3 year…

Preparing IRS Form 1045 Tentative Carryback Application or Carryback Claim Net Operation Loss (NOL)

Preparing Form 1045 to apply a tentative carry-back loss is ridiculously complicated for most people.  Even seasoned tax prepares have difficulties preparing this form. 

If after you filed an amendment to your tax return (Form 1040X) and the IRS sends you a notice requesting that you now file Form 1045 you should consider calling someone for help!  I filed one of these forms back in June for a client of mine and just received notice that it was approved, lowering the taxpayer's liability down from $8492 to $2900.

You may want to contact me on this.

If you wanted to try to tackle the 1045 yourself here are the instructions:

Department of the Treasury
Internal Revenue Service 2010
Instructions for Form 1045
Application for Tentative Refund
Section references are to the Internal Definitions connection with gambling, the racing
Revenue Code unless otherwise noted. of animals, or the on-site viewing of
Eligible loss. For an individual, an such racing, and the portion of any