What is a compromise of taxes?
A compromise of taxes is a process by which a taxpayer may be able to satisfy a tax debt for an amount that is less than the total amount due.
Who qualifies for a compromise of taxes?
Anyone whose resources are so limited or whose amount due is so large that they can never repay the full debt, even over time, may qualify. The taxpayer may be an individual, corporation, limited liability company, partnership, or any other legal entity with a tax obligation.
How can I file a Petition for Compromise of Taxes?
You must complete
Form A-212. This form is available from any Wisconsin Department of Revenue (DOR) office. You may request the form in person, by telephone, or by writing us. The form is also available on the department's website at
Where should completed petitions be sent?
If you are working with or have been contacted by one of our collection agents, the petition should be sent to that agent. If you are not working with an agent, send the petition to the district office near you. A list of our district offices and addresses can be found on the back page of the form.
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. Should you need assistance or have questions, any DOR collection agent can advise you of the proper procedure.
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 your latest statement from mortgage holders or other lenders for any debt you listed.
A checklist of required documentation is available at (revenue.wi.gov/DORForms/a-212a.pdf). We reserve the right to independently verify any information you provide through our records or third-party contacts.
When does DOR accept a petition?
You must meet the following conditions:
You must be able to demonstrate that you cannot dispose of assets or borrow against them to pay your debt in full.
The income statement in Section 14 of the compromise form must demonstrate that your monthly income is not enough to pay your debt in full through installment payments.
How is my ability to pay in full determined?
We will look at your 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.
What happens after I have filed a petition for compromise?
Once the form has been completed, we usually will act on it within 45 to 90 days after receiving it.
Incomplete petitions or those which appear to understate the value of assets or overstate debts and expenses can cause delays.
Any collection actions which have been started by us before your petition was filed, such as wage attachments, levies, or property seizures, will continue unless we believe it is in our best interest to stop such action. No new collection actions will be started while we review your petition. We will, however, apply state and/or federal refunds (if any) and may still file new tax lien(s).
We continue to add interest on any unpaid balance until it's paid.
How will I be notified if my petition has been accepted?
After review, we will send you a written response. We may:
What happens if my petition is accepted?
If we accept a compromise offer, you must pay the amount in full within 10 days of receiving our acceptance.
In most cases, we will issue satisfactions of all outstanding delinquent tax warrants. If the compromise is also contingent on future activities you have agreed to, such as incurring no new delinquencies for a stated period of time, outstanding delinquent tax warrants will not be satisfied until all conditions of the compromise have been met.
After I have paid the compromise, am I done with this matter forever?
Most people are done. However, by law, we may review your account within three years to determine if there has been a change in your financial condition which would enable you to pay the amount previously forgiven in the compromise settlement. If we find your financial situation has changed, we will notify you of a hearing to review whether the compromise should be reopened.
If I pay the compromised amount and apply for a loan, what will the credit reporting agencies find on my record?
The Department of Revenue does not report directly to any credit reporting agency, however, if you had a tax lien filed, courthouse records will reflect that it has been satisfied. Upon request, a letter may be provided to you stating that the lien(s) have been satisfied.
What happens if I would like to settle my taxes for an amount less than the total due but cannot come up with a lump sum payment?
Send us a letter explaining how you will pay the total offered. If your plan is reasonable, we may send you a letter agreeing to your plan upon completion of all of the terms that are negotiated.
If you ask for such a proposal, we will usually add other conditions to the agreement. Such conditions could include filing and paying current tax obligations as they become due, or other terms. Caution: A breach of any condition will immediately void our commitment to compromise your account.
A potential disadvantage to you is that if tax liens have been filed, they are not satisfied until all the terms and conditions of the negotiated offer have been fulfilled.
I know someone whose situation was similar to mine. That person's compromise was accepted. Why was mine rejected?
We judge each case individually based on all of the facts and information available to us.
Can I petition for a compromise more than once?
Yes. If you have previously petitioned for a compromise and that offer was not accepted, you may petition us at a later date. We are unlikely to view a second compromise offer more favorably than the first unless your financial condition has worsened, or you are increasing the amount of your offer.
If I am forced to pay the full amount of my tax liability, I may have to change my life style. Is that fair?
Yes. A petition for compromise is granted to those who could never pay their debt because of its size relative to their assets, income, and earning potential. The fact that you may have to change your life style and make payments for several years does not make you a compromise candidate.
If my offer is denied, can I ask for a review of that decision?
Yes, requests for a second review of a rejected compromise should be directed to:
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.
FOR MORE INFORMATION PLEASE CONTACT:
WISCONSIN DEPARTMENT OF REVENUE
PO Box 8901
Madison, WI 53708-8901
Phone: (608) 266-7879
Fax: (608) 261-8978