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The Massachusetts Department of Revenue (DOR) has updated its Offer in Compromise (Offer) program to streamline the process and incorporate best practices.

Offer overview

An Offer is an agreement between the taxpayer and DOR to settle a tax liability for less than the full amount owed because:

  • The taxpayer is unable to pay the full liability owed
  • There is serious doubt as to whether the tax can be collected
  • There is no intent to defraud by the taxpayer, and
  • Accepting an Offer is in the best interest of the Commonwealth.

Prepare to make an Offer

Taxpayers should first review Offer in Compromise Frequently Asked Questions. If the taxpayer is eligible, download and complete the Offer in Compromise Application following the instructions.

Basic Eligibility Rules

DOR may, but is not required to, accept an Offer. A taxpayer has no right to such a settlement. Since DOR doesn’t negotiate on any Offer, taxpayers should put forth their best Offer with their application.

A taxpayer does not meet the Basic Eligibility to make an Offer and any submitted Offer will not be processed, and case will remain subject to collection activity, if:

  • They have not filed all required Massachusetts tax returns and reports with DOR
  • They have not paid the entire liability of the most recent tax year, or 12 months of tax returns that they were legally required to file
  • They have not made all required estimated payments for the current year
  • They have not received a final Notice of Assessment for all Massachusetts state taxes that are owed
  • They actively dispute the amount of tax owed or that they are responsible to pay the tax liability.

Offers received where Basic Eligibility is met will be subject to Financial Audit.

The submission of an Offer will not stop DOR’s normal collection process until Basic Eligibility is met and a Financial Audit of the application begins.

Interest and penalties will continue to accrue on any unpaid amounts.

How to file an Offer

Below is a list of the documents in the Offer in Compromise Application that are required to be completed and submitted when filing an Offer.

All information must be filed for DOR to determine if the Offer can be processed:

  • Form M-656 Offer in Compromise Application
  • Form M-433-OIC Statement of Financial Condition and Other Information
  • Electronic Funds Transfer Authorization Form
  • Supporting Documentation
    • Refer to the Documentation Checklist in the Application Packet
  • Form M-2848 Power of Attorney and Declaration of Representative
    • Must be filed if someone is acting as a representative for the taxpayer
  • Initial Payment
    • An Initial Payment must be included based on the payment option selected: 20% of the Offer amount for a lump sum cash Offer or the first month’s payment for a periodic payment Offer. The Initial Payment and any payments received during the Financial Audit will not be returned if the Offer is rejected or withdrawn and will be applied against the outstanding liability.

Minimum Offer Amount

The Minimum Offer Amount is a calculated amount that equals the net equity of the taxpayer’s current assets, plus a projected amount that could be collected from the taxpayer’s future income.

The Minimum Offer Amount must equal or exceed $5,000. The ability to pay more than the Minimum Offer Amount, as determined by DOR will result in rejection of the Offer.

How to submit an offer

After completing the forms required, email the Offer application to doroicunit@dor.state.ma.us.

If unable to send electronically, applications can be mailed to:

Massachusetts Department of Revenue
Collections/OIC Unit
P.O. Box 7021
Boston, MA 02204

For help completing the application, contact the Collections Bureau at (617) 887-6400.

Offer acceptance

When the application is submitted, a thorough Financial Audit of the taxpayer’s situation and proposed payment will be conducted by DOR.

Offers require the acceptance of the Commissioner of Revenue, and two Deputy Commissioners. Some Offers require the review of the Massachusetts Attorney General.

If the Offer is accepted, the taxpayer’s name, and the amount of the settlement will be published and made public:

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