Lothamer Tax Resolution to Provide State of Michigan Offer In Compromise Settlement Negotiation Services

October 7, 2014 - Lothamer Tax Resolution will aggressively negotiate State of Michigan Offer In Compromise (OIC) settlements on behalf of Michigan taxpayers when the new law goes into effect next year.

On July 27, 2014, Michigan Governor Rick Snyder signed into law legislation (HB 4003) which—for the first time—authorizes the Michigan Department of Treasury to accept Offers in Compromise from delinquent taxpayers. Over 40 states have already implemented Offer in Compromise programs, making Michigan one of the last to have an initiative in place.

The new Michigan Offer in Compromise law goes into effect on January 1, 2015 and will allow taxpayers to compromise the payment of a tax, unpaid account, or amount due to the State of Michigan if they qualify by one of the three ways:

Doubt as to Collectability

Doubt as to Liability

A federal offer has been granted for the same tax years

Doubt as to Collectability exists for taxpayers who are unable to pay off the tax due because of financial hardship (e.g. insufficient income and assets).

Doubt as to Liability exists when taxpayers can present sufficient evidence to prove they do not owe a portion of, or all, due taxes.

If an IRS Offer in Compromise settlement has already been accepted, the State will apply the same percentage of settlement received in the federal offer to the taxes owed to Michigan for the same tax years. For example, if you owed $100,000 in federal taxes and the IRS settled for $5,000 (95%), your state tax debt of $10,000 would be reduced to $500, if for the same tax years. Otherwise, one would file an Offer directly with the State under Doubt as to Collectability or Doubt as to Liability.

Pursuant to the new law, once an Offer in Compromise is submitted to the Michigan Department of Treasury, the State will generally not issue a Levy against you while the Offer is pending.

Individuals can directly apply for an Offer in Compromise (OIC) with the Department of Treasury. However, the percentage of accepted Michigan OICs for people filing on their own is yet to be determined. For federal offers, acceptance rate for people filing on their own is less than 50%. When taxpayers work with Lothamer, they ensure that an accurate and complete offer is being filed. Our OIC acceptance rate is over 90%, and we apply our experience as Enrolled Agents, CPAs, and Tax Attorneys to help you obtain the lowest possible settlement amount.

The Michigan Treasury has 180 days from the date the law was signed to establish guidelines and procedures for submitting and processing the offers. Where appropriate, the guidelines will be modeled after the IRS's Offer in Compromise program. Michigan will also be required to report statistics on the new program in order to track its success.

Lothamer President Jesse Lothamer, J.D., C.P.A., and E.A., personally worked on HB4003 and can answer any questions you have about the legislation.

Contact us at 877-829-2455 to see if you qualify for an Offer in Compromise.