New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter XIII - Compromises
Part 5000 - Compromises Under Subdivision Eighteenth-a Of Section 171 Of The Tax Law
Section 5000.5 - Filing of offer in compromise
Universal Citation: 20 NY Comp Codes Rules and Regs ยง 5000.5
Current through Register Vol. 46, No. 12, March 20, 2024
(a) Filing. An offer in compromise may only be made after the issuance to the taxpayer of a written notice of the Commissioner of Taxation and Finance advising the taxpayer of a tax deficiency, determination of tax due, assessment, or denial of a refund, credit or reimbursement application. The taxpayer shall file an offer in compromise as prescribed in the forms.
(b) Supporting documents.
(1) An offer in
compromise based on doubt as to liability must be supported by appropriate
documents and briefs, and the amount acceptable will depend upon the degree of
doubt found in the particular case.
(2) An offer in compromise based on doubt as
to collectibility requires a showing that the taxpayer has been discharged in
bankruptcy, is insolvent, or that collection in full would cause an individual
taxpayer undue economic hardship. A statement of financial condition and other
information (Form DTF-5) is required in all offer-in-compromise cases based on
the taxpayer's inability to pay the total amount due or that full payment will
cause undue economic hardship, regardless of the type of tax or amount of
liability involved. The amount acceptable in compromise must reasonably reflect
collection potential (reasonable collection potential) or otherwise be
justified by proof offered by the taxpayer. Reasonable collection potential is
based on the total realizable value of the taxpayer's assets and the amount
that could reasonably be expected to be collected from the taxpayer's
anticipated future income, after giving effect to all priorities granted to New
York State and applicable statutes of limitations on collections.
(i) The realizable value of the taxpayer's
assets is the amount that could reasonably be expected from the sale of the
assets within 90 days or less (quick sale value) minus any amount owed to a
secured creditor with priority over the department's interest. Assets such as
real property, personal and business assets, and vehicles will generally be
valued at 80 percent of fair market value to determine the quick sale
value.
(ii) Generally, anticipated
future income is calculated over the remainder of the collection period, but no
less than a period of 5 years and no more than a period of 10 years, unless
there are circumstances indicating that a significant recovery can reasonably
be expected if a longer period is used. Other circumstances, including the age
of taxpayer, the age of the liability, and the best interests of the State are
also considered. Collateral agreements, such as agreements pertaining to
payments from future income may also be required based on the facts in a
particular case.
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