Offer in Compromise Program for Taxpayers in Washington

Posted on August 13, 2021

There are instances where taxpayers will be put in a position where they can’t pay their tax liabilities for certain valid reasons. One available option is to apply for a program called Offer-In-Compromise (OIC). This is a program where taxpayers can settle their tax debt by paying only a fraction of the whole amount they owe. Basically, it provides a compromise between an eligible taxpayer and the tax system involved.

OIC Program Available to Washington Taxpayers

The Department of Revenue (DOR) of Washington State offers taxpayers a similar option to OIC under Rule 100 settlements. Rule 100 settlements give the taxpayers the chance to appeal to an informal administrative ruling to come to a compromise regarding their outstanding tax liabilities. As one would expect, the inability to pay cannot be considered a valid reason to appeal for a settlement. And most certainly, applying does not guarantee eligibility. With that being said, some conditions need to be met before a taxpayer is deemed qualified.

Criteria for Settlement

At least one or more in the listed criteria below should be satisfied for the Department to consider the appeal for settlement.

The issue is non-recurrent. The matter in question is considered as a preliminary appeal.

If it creates lawful conflict between statute, rule, or written instructions to the taxpayer.
If strict enforcement of the law will put the taxpayer in extenuating circumstances. For example, a taxpayer who requires medical maintenance will use equities to payoff their tax penalties.

If presented in the court of law, the outcome of the ruling results in uncertainty and ambiguity.

Settlement Procedure

Start with a Proposal. The road to a fresh start begins with a written appeal addressed to the Administrative Review and Hearing Division (ARHD). And within this proposal should include the following:
The taxpayer’s outstanding tax debts (specific amount in dispute).
The reason for settlement.
The taxpayer’s settlement offer.
A reasonable justification for the taxpayer’s settlement offer.

For your convenience, you can also use the Settlement Offer Form provided by the ARHD.

Review of the Proposal. Once received by the ARHD, a Tax Revenue Officer (TRO) will be assigned to take a look and carefully review and deliberate your settlement offer until further notice.

Settlement Approval

Compromising to the settlement offer brings about the ARHD’s preparation of a formal document that stipulates the agreed terms and conditions between the taxpayer and the state department. In addition to the closing agreements, it may also state future obligations of the Washington taxpayer. Both parties signing the agreement signify the conclusion of the settlement, officially resolving the dispute.

Settlement Denial

If a settlement offer is declined, the dispute will proceed to undergo continuous review by the division’s process.

Handling tax appeals can be a painstaking and stressful process that could undoubtedly put a lot of hassle on a taxpayer. For this reason, hiring a professional should be considered. If you want to know more about our tax solutions and how we can help you, schedule a consultation with Golden Tax Relief.