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Colorado Offer In Compromise

Tax payments can be overwhelming at times, especially if you don’t have a reliable professional to guide you.

That’s why we are here with our practical and efficient solutions to help you tackle various tax-related problems. Whether it’s an Offer In Compromise, levies, garnishments, or any tax settlement, we are happy to help. 

So, if you’re planning to file an Offer In Compromise, read on to find out how we can get the job done.

Colorado Offer In Compromise 

Under special circumstances, taxpayers can get a concession from the Colorado Department Of Revenue in settling their state tax liabilities through the Offer In Compromise program. The Offer in Compromise Program allows taxpayers to pay less than the amount originally owed f the taxpayer is facing financial hardships or is otherwise unable to afford to pay the full amount due for a valid reason. 

However, a taxpayer must file an OIC with the Internal Revenue Service before applying for a Colorado state OIC. The state office won’t accept the application until the IRS does for the same type of tax liability and the same tax period. 

Although this program seems like a saving grace for tax repayment hardships, note that everyone cannot avail of it. Among multiple other eligibility criteria, those who file the required tax returns and don’t have an open bankruptcy case can opt for it. Let’s discuss this in more detail.

Who Can Apply For An Offer In Compromise?

To get an OIC application approved by the IRS, the candidate must meet the following criteria:

1. Liability

If you feel that the tax liability had some pitfalls and wasn’t accurately assessed, then you can seek our help to raise concerns against the owed amount. However, you will need documented evidence to prove your point. 

2. Collectibility

The most common ground for an OIC application is that the taxpayer is incapable of paying the owed amount and has adequate evidence to prove it. This is a valid situation if a taxpayer’s income and assets have lesser value than what the taxpayer owes in tax.

Above everything, you must prove that there are valid reasons for granting an Offer in Compromise, such as the taxpayer is in financial hardship and unable to pay the tax. Some areas looked into by the IRS and the Colorado Department of Revenue before approving your application are:

  • All the required tax returns have been filed
  • The taxpayer has not received any tax relief previously. Some examples of prior tax relief include innocent spouse relief, a past expiration of the statute of limitations to collect the tax write-off, tax liabilities discharged due to bankruptcy, etc. 
  • Your current financial situation and living circumstances
  • Total assets and their equity
  • Annual income
  • Total IRS or Colorado Department of Revenue  allowable monthly living expenses

Furthermore, if a taxpayer is not expected to settle the outstanding delinquencies within 6 years from the date that the tax was due, Colorado Revised Statute 39-10-101(2)(b) states that the taxpayer is eligible for an OIC. However, the taxpayer must still also satisfy all the above-mentioned criteria. 

3. Effective Tax Administration

This policy applies to those taxpayers who can completely pay off in full the owed tax amount by liquifying their asset equity. If you fall in this category, you’ll have to prove that selling off your assets will create financial hardship. Only then will you be able to avail of Effective Tax Administration or ETA. 

Usually, ETA is used by retired people or those with some disability who have to use their assets to sustain a limited income to live off of. 

How To Apply For An Offer In Compromise?

Once the IRS approves your Offer In Compromise request, you’ll have to share your application and some other important documents with the Colorado DOR. Here’s all the paperwork you’ll need:

  • IRS Form 656 with the IRS date of receipt
  • A document proving that the IRS approved an OIC on your current taxes
  • IRS Form 433 A
  • The track record of your account (the IRS Account Transcript for each tax year at issue) by the IRS
  • Statement of income and expenses – Form 6596 DR
  • Detailed financial information along with a written disclosure statement explaining any special circumstances

After applying for the offer, you’ll have to cover your back taxes till the CO DOR reviews it and independently verifies your situation. If it gets accepted, you’ll be notified in writing and asked to pay for the full offer amount within 15 days. In case you fail to do that or the check bounces, your offer will be canceled.

What Do We Offer

Filing an OIC is complicated and requires some financial experience and knowledge, so the majority of taxpayers are unaware of how to go about it. That’s where our team of qualified tax attorneys, accountants, and Enrolled Agents steps in to guide you through the application procedure.

We can take the burden off your shoulder and do all your paperwork diligently without any hiccups. Our attorneys are well-versed in such official documentation and detail-oriented tasks. 

Plus, no matter how stressful your financial situation is, we’ll try to provide the best consultation and an appropriate tax solution. Our team will break down every step of the procedure for you to stay on top of the situation all the time.

So, do give us a chance to get your Offer In Compromise approved!