SALT Report 1637 – The Nevada Tax Commission issued guidance regarding offers in compromise. In certain situations, the NTC may enter into a compromise agreement with a taxpayer who has unpaid liabilities for any tax, contribution, premium, fee, interest, or penalty that the NTC has determined the Taxpayer owes.
Offers in compromise may be accepted for the following reasons:
Doubts Regarding Collectability – These requests are from Taxpayers who are unable to pay the full amount. A Personal Financial Statement and a Business Financial Statement must be completed to process these requests.
Doubt Regarding Liability -Taxpayers may request a compromise because they do not believe they owe the total amount of the liability. The Taxpayer must provide, in writing, the reason they believe they do not owe the tax assessed by the Department and the amount of tax, penalty and interest they feel they owe instead. This offer does not have to do with whether or not the person has the ability to pay the liability.
Consideration of Equity and Fairness – This type of offer generally applies to hardship situations but not necessarily financial hardships. There may be circumstances present that either caused a person not to pay the correct amount of tax, or payment of the full amount of the tax would create a hardship or would be unfair and inequitable. A financial statements and verification may be required depending on the circumstances provided.
Acceptance of an offer in compromise is dependent upon the Taxpayer’s history of compliance with all other requirements. If the debt is due to an audit, the Taxpayer must exhaust their administrative rights before an offer is made or accepted. The Department may accept an offer in compromise from a Taxpayer that is already a part of an installment agreement.
Additionally, if the Taxpayer signs statute of limitations waiver the Department will not take any further action on the debt until the NTC has accepted or rejected the offer in compromise. Once the NTC agrees to an offer in compromise and the offered amount has been paid in full, that Taxpayer’s debt will be considered paid in full, however, the NTC may attempt to collect the remaining liability from any other person deemed liable that is not part of the offer in compromise.
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