Petition for Compromise of Taxes - Inability to Pay

1. What is a compromise of taxes?

   A compromise of taxes is a process for a customer to satisfy a tax debt for an amount that is less than the total amount due.

2. Who qualifies for a compromise of taxes?

   Anyone whose resources are so limited or whose amount due is so large they can never repay the full balance over time may qualify. An individual, corporation, limited liability company, partnership, or any other legal entity with a tax obligation may make a request.

3. How can I file a Petition for Compromise of Taxes?

   You must complete either

   • Form A-212 Offer in Compromise for Wage Earners and Self-Employed Individuals, or
   • Form A-213 Offer in Compromise for Business
   
   

   Both forms list required verification that must be included.

   You can also obtain these forms from any Wisconsin Department of Revenue (DOR) office. You may request them in person, by telephone, or by writing us.

4. Where do I send my completed petition?

   Mail completed forms and additional required documents to the department at PO Box 8901, Madison, WI 53708-8901.

5. How complicated is the Petition for Compromise form? Do I need an accountant or an attorney to help me complete it?

   The form is designed to be self-explanatory. Most people should be able to complete it without professional assistance. If you need assistance or have questions, any DOR compliance agent can answer questions you may have about completing the form.

6. Is any other paperwork required besides the compromise form?

   Yes, in most situations, other information is required. For example, if you own real estate, you must provide the latest real estate tax bill to verify the fair market value you listed.

   You must also provide copies of billing statements as proof of expenses such as an electric bill or loan repayment information for any debt you listed.

   A list of required attachments is on the last page of the form. We reserve the right to require additional items and/or verify any information you provide through our records or third-party contacts.

7. How is my ability to pay determined?

   We review a number of variables when considering your request. Some examples include equity in any real or personal property; past, present, and future earning potential; the priority of other creditors; whether your current financial condition is likely to be temporary or permanent; your present life style; your ability to borrow; and any other factors we consider relevant in making a decision.

8. What happens after I have filed a Petition for Compromise?

   We contact you to indicate we received your completed petition or to request additional information. Once we receive a complete request, we attempt to act on it within 90 days.

   Any collection actions in progress at the time your petition is received, such as wage attachments, levies, or property seizures, continue unless we believe it is in the state's best interest to stop such action(s). No new collection actions are initiated while we review your petition. We continue to intercept state and/or federal refunds (if any) and may file new tax lien(s). Interest also continues to accrue on any unpaid balance until it's paid.

9. How am I notified if my petition is accepted?

   We send you a written response. We may:

   • Accept your offer
   • Reject your offer but propose a counteroffer
   • Reject your offer and refer you to a DOR compliance agent to determine the best method to pay your debt
     
     
10. What happens if my petition is accepted?

    If we accept your compromise offer, you must pay the amount as outlined in the order. This is usually within 10 days of acceptance, unless you requested a longer term.

    In most cases, we satisfy outstanding delinquent tax warrants upon receipt of payment in full. If the compromise order is contingent on future activities, such as incurring no new delinquencies for a stated period of time, we do not satisfy outstanding delinquent tax warrants until you meet all conditions of the compromise.

11. After I pay the compromise, am I done with this matter forever?

    For most people, yes. However, by law, we may review your account within three years to determine if there is a change in your financial condition which enables you to pay the amount previously forgiven or if there are assets or income not disclosed in the compromise settlement. We conduct a hearing with you to review whether to reopen the compromise.

12. If I pay the compromised amount and apply for a loan, what do the credit reporting agencies find on my record?

    The DOR does not report directly to any credit reporting agency, however, if we filed a tax lien against your debt, courthouse records reflect it is satisfied. Upon request, we can provide a letter to you stating the lien(s) is satisfied.

13. What happens if I want to settle my taxes for an amount less than the total due, but cannot come up with a lump sum payment?

    We may allow you to make payments on the compromised amount. Contact the department or include a proposal for payments if your offer is accepted with your petition.

    If tax liens are filed, we do not satisfy them until you make all payments and meet any other conditions of the compromise.

14. I know someone whose situation was similar to mine. That person's compromise was accepted. Why was mine rejected?

    We review each case individually based on all information available to us.

15. Can I petition for a compromise more than once?

    Yes. If you previously petitioned for a compromise and that offer was not accepted, you may petition us at a later date. However, we are unlikely to review a second compromise offer differently than the first unless your financial condition changed or a substantial amount of time passed.

16. If my offer is denied, can I ask for a review of that decision?

    Yes. Direct your request for a second review of a rejected compromise to:

    MS 4-CMP-W
    Compliance Bureau Director
    Wisconsin Department of Revenue
    PO Box 8901
    Madison, WI 53708-8901

    The request for a second review must be in writing and should provide any information you believe would cause us to reconsider the acceptance of your compromise offer.

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of October 22, 2021: Secs. 71.82, 71.91, 71.92, 73.03, 73.04 and 73.13, Wis. Stats.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100036

October 22, 2021