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What is a CDTFA Sales Tax Offer in Compromise?

If you agree with your tax billing, but do not have the means to pay the full amount, you can offer to pay a lesser amount under the sales tax offer in compromise program. An Offer in Compromise (OIC) is a proposal to pay the California Department of Tax and Fee Administration (CDTFA) an amount that is less than the full sales tax due, including any penalties and interest.

Do you qualify for the OIC program?

The CDTFA offer in compromise program is for taxpayers or feepayers that do not have, and will not have in the foreseeable future, the income, assets, or means to pay their tax liability in full. You qualify for the program if you meet all of the following criteria:

  1. Have a final tax or fee liability on a closed account.
  2. Are no longer associated with the business that incurred the liability or a similar type of business.
  3. Do not dispute the amount of tax or fee you owe.
  4. Cannot pay the full amount you owe in a reasonable amount of time.

In some circumstances, the CDTFA may also consider an OIC for open and active businesses that have not received reimbursement from the taxes, fees, or surcharges owed; successors of businesses that may have inherited tax liabilities from their predecessors.

Although each case is evaluated based on its own unique set of facts and circumstances, the CDTFA will evaluate the following factors for consideration:

  1. The taxpayer’s ability to pay
  2. The amount of equity in the taxpayer’s assets
  3. The taxpayer’s present and future income
  4. The taxpayer’s present and future expenses
  5. The potential for changed circumstances

Can I submit a Sales Tax Offer In Compromise?

Taxpayers frequently ask whether an offer in compromise is right for them. Moreover, whether your CDTFA tax liability resulted from a CDTFA tax audit, you may be eligible. An offer in compromise is similar to a CDTFA settlement, but differs in many ways. If your business has a sales tax liability, we can help. Contact a sales tax attorney at Disparte Tax Law today for a free consultation. Furthermore, if you have received a CDTFA notice of determination, review our services with respect to CDTFA Tax Appeals procedures.