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DISTRICT OF COLUMBIA
OFFICE OF TAX AND REVENUE
Form OTR-10 Instructions (Rev. 3/99)
Instructions for Submitting
Offers in Compromise
What you should know before submitting an offer in compromise
Instructions for completing Form OTR-10, Offer-in-Compromise
Instructions for completing Forms PA-1 and/or PA-2, Collection Information
Statements
Forms OTR-10, PA-1, PA-2
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What You Should Know Before
Preparing an Offer in Compromise
Office of Tax and Revenue (OTR) may legally compromise a tax liability owed based only on:
Legal Limitations
on Compromise Collectibility - doubt that OTR can collect the full amount owed; and/or
Liability - doubt whether you owe the tax
Do not submit an offer based on doubt of collectibility if:
Are You
An Offer The entire amount you owe can be paid through liquidation of your assets or through a monthly
Candidate? installment plan.
OTR can collect more from your assets and/or future income than you are offering.
Note: We will not waive penalty and interest because you offer to pay the tax.
We may require additional agreements which would require you to:
Additional
Agreements Pay a percentage of future earnings.
Refrain from claiming certain present or potential tax benefits.
Submitting an offer does not automatically suspend collection activity.
Suspending
Collection If the offer was filed for the purpose of delaying collection of the tax, or if delay would interfere
with our ability to collect the tax, we will continue collection efforts.
If you already have an installment agreement, you must continue making your payments while the
offer is being considered.
Form Offer in Compromise Form OTR-10 is the official Offer in Compromise agreement. You must use this
form or an exact duplicate.
Can We Process
Your Offer? We will return your offer to you and ask for clarification if you do not fill in every line item on the
form. Refer to “Instruction for completing Form OTR-10", on page4. We cannot process your offer
if it contains any of these problems:
A substitute for Form OTR-10 is not an exact duplicate of the official form.
Pre-printed terms of the offer form are altered.
Taxpayer is not identified.
Taxpayer Identification Number is not included.
An amount is not offered and/or payment terms are not stated.
Appropriate signatures are not present.
Forms PA-1 and PA-2, if required or substitute balance sheets and income
statements are missing or are incomplete.
We determine that the amount you offered is less than your equity in assets
and available income.
You have not filed all required tax returns.
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Financial You must file Form PA-1, Collection Information Statement for Individuals and/or Form PA-2 Collection
Information Information Statement for Businesses with Form OTR-10.
Required for Offers
based on Doubt as to Important: You must attach a copy of your latest Federal Income Tax Returns for the business and
for all Individuals responsible for the tax who submit this offer.
Collectibility
The information you provide must be current and complete and reflect activity within the 6 months
before the date you submit the offer. We use this information to evaluate the offer.
Do not include information relating to unsecured creditors. For example, do not include amounts you owe
on credit cards or loans made without pledging assets as security.
If you owe business income tax, you must submit Forms PA-1 for all persons responsible for the tax and
Form PA-2 for the business.
If only one spouse owes tax but both have income, prepare Form PA-1 using only the liable spouse’s income
and expense information. We will require disclosure of financial information of the non-liable spouse during our
investigation.
Assets or income available to you but not available to OTR for direct collection action should be included
on the financial statement. Even if OTR may not collect directly from the assets, those assets are
available to raise funds and should be included in the offer.
How Do I
Compute the You will receive more favorable consideration if you offer a substantial portion of the total tax, penalty and
Amount Of My Interest due, you offer money you can raise only under condition that your tax is settled. Examples are personal
Offer? loans from friends or family, bank loans, and proceeds from contracts you are able to make if tax liens are rel-
Eased. We will consider your offer more favorably if you submit all or a substantial portion of the offer amount
With your offer request to demonstrate your sincerity. Any money submitted with an offer is refundable in the
Event the offer is rejected.
Investigation In determining the amount that would be acceptable to compromise your liability, an offer examiner will
of the Offer Review your offer and conduct an independent investigation to ensure that:
You accurately included all assets and income available to you.
You claimed only the necessary expenses allowable for the health and welfare of you and your family and
to provide for production of income.
We may request additional information from you. If we do not receive it, we will reject your offer. Based on our
investigation, we may accept or reject the offer or ask you to increase the amount of the offer.
We will confirm acceptance by mail.
If Your Offer You should promptly pay any unpaid offer amounts.
Is Accepted You must comply with all contractual terms and conditions of the offer.
We will release all liens when the offer amount is paid in full.
Failure to adhere to the 5-year compliance requirement to file all returns and pay all amounts due may result
in default of your offer. If this occurs, the unpaid compromised tax liability will be reinstated, any released
liens will be reinstated, and the collection process will resume.
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Instructions for Completing
Forms PA-1 and PA-2
Read the terms and definitions below to help you prepare Forms PA-1 and PA-2. Complete every item on the forms; if an
item doesn’t apply to you, enter “N/A.”
Current Market Value: The amount you could reasonably expect to be paid for the asset if you sold it. Do not guess at
with your financial statement.
Necessary Expenses: (Not for business entities) Expenses needed to provide for your and your family's health and
Expenses Not Tuition for private elementary and secondary schools, public or private college expenses
Generally Allowed: charitable contributions, voluntary retirement benefits, unsecured debts, cable television charges
Equity in Assets: Current market value of asset minus current balance due on loan or mortgage.
Instructions for Completing Form OTR-10
Failure to follow these instructions could result in our returning your offer. Questions may be directed to the
Revenue Officer handling your case, or if none, to (202) 727-4TAX
Item 1 Enter the taxpayer’s name and home or business address, including a mailing address if different.
Item 2 Enter the name and social security number of all persons submitting the offer.
Item 3 If the liability being compromised is owned by a business, enter the business tax number.
Item 4 Show the business tax numbers for all other businesses you own. Under the terms of the offer
you must comply with the filing and paying requirements of the tax laws for 5 years after
Item 5 Enter the total amount of tax, penalty and interest, for all taxes you seek to compromise. Prepare
a separate schedule listing the type of tax, tax period and the amount of each tax bill you seek to
compromise.
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Item 6 Check the applicable block describing the basis for your offer.
If Doubt as to Liability, you must submit a written statement describing in detail why you
do not believe you owe the liability. You must complete item 7.
If Doubt as to Collectibility, you must submit Collection Information Statements, Form PA-1
Item 7 Enter the total amount of your offer. Do not include amounts you have already paid, OTR has
already collected, or is due to receive.
Enter other proposed payment terms if you cannot pay the amount offered within 90 days.
12-31-97. If we determine that you can pay in less time, we will require earlier payment or we
Item 8 It is important that you thoroughly read and understand the contractual requirements in this
section.
Item 9 All persons submitting the offer should sign and date Form OTR-10. Where applicable, include
Where to File File your offer in compromise at 941 North Capitol Street NE, Washington, D. C. 20002.
If you have been working with a specific OTR employee, file the offer with that employee.
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Item 5
I/we submit this offer to compromise the tax liabilities plus any interest,
District of Columbia penalties, additions to taxes and additional amounts required by law (tax
Office of Tax and Revenue liability) for the tax type and periods marked below:
Form OTR-10
Offer in Compromise
(If you need more space, use another sheet titled Item 6
“Attachment to Form OTR-10", sign it and date it.)
I/we submit this offer for the reason(s) checked below:
Item 1
___________________________________________________________________
Taxpayer Name
_____________________________________________________________________________
Street Doubt as to Liability - I do not believe I owe this amount.
Attached is my detailed explanation of the reasons I believe I do
_____________________________________________________________________________ not owe it.
City State Zip Code
______________________________________________________________________________ Doubt as to Collectibility - I have insufficient assets and
Mailing Address (if different from above)
income to pay the full amount. Attached are my complete
financial statements (Form PA-1 and/or PA-2), personal and
______________________________________________________________________________
Street business Federal Income Tax returns.
______________________________________________________________________________ Item 7
City State Zip Code
I/we offer to pay
Item 2 $___________________________________
Names and Social Security Numbers of All Persons Submitting This Offer
In full with this offer. My check is attached.
Down payment of $___________________ is attached.
No down payment
Item 3 Check one of the following boxes
Business Tax Number(s)
Balance will be paid in 10 30 60 or 90
days from date of acceptance of the offer. If more than one
payment will be made during the time checked, provide the
amount of the payments and dates to be paid below.
Item 4 Other proposed payment terms. Enter the specific dates
Other Business Tax Numbers (of Related Businesses Not Included in Offer)
and amounts of the payments you propose on the lines below
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Item 8 (m) The offer is pending starting with the date an authorized OTR official
signs this form and accepts my/our waiver of the statutory periods of
By submitting this offer, I / we understand and agree to all of the limitations. The offer remains pending until an authorized OTR official
following conditions: accepts, rejects or acknowledges withdrawal of the offer in writing.
(a) I / we voluntarily submit all payments made on this offer. (n) The waiver and suspension of any statutory periods of limitation
for assessment and collection of the amount of the tax liability
(b) OTR will apply payments made under the terms of this offer in the described in item (5), continues to apply: while the offer is pending
best interest of the government. (see (m) above), during the time I/we have not paid all of the amount
offered, during the time I/we have not completed all terms and
(c) If OTR rejects the offer or I/we withdraw the offer, OTR will return conditions of the offer, and for one additional year beyond each of
any amount paid with the offer, if requested. the time periods identified in this paragraph.
(d) I/we will comply with all provisions of the District of Columbia (o) If I/we fail to meet any of the terms and conditions of the offer, the
Code relating to filing my/our tax returns and paying my/our re- offer is in default, then OTR may: immediately file suit to collect the entire
quired taxes for 5 years from the date OTR accepts the offer. I/we unpaid balance of the offer; immediately file suit to collect an amount
understand that if I/we fail to do this, OTR may reinstate the tax equal to the original amount of the tax liability as liquidating damages,
that was forgiven as a result of this offer, refile the tax liens re- minus any payments already received under the terms of this offer;
leased under this offer, and collect the full amount of the tax disregard the amount of the offer and apply all amounts already paid
including penalties and interest. This condition does not apply to under the offer against the original amount of tax liability; or file suit or
offers based on Doubt as to Liability. levy to collect the original amount of the tax liability, without further
notice of any kind.
(e) I/we waive and agree to the suspension of any statutory periods of
limitations (time limits provided for by law) for OTR assessments and OTR will continue to add interest on the amount OTR determines i s due
collection of the tax liability for the tax periods identified in item [5]. after default, from the date the offer is defaulted until I/we completely
satisfy the amount owed.
(f) OTR will keep all payments and credits made, received, or applied
to the amount being compromised before this offer was submitted. Item 9
OTR may keep any proceeds from a levy served prior to submission of
the offer but not received at the time the offer is submitted. If I/we If I/we submit this offer on a substitute form OTR-10, I/we affirm that this
have an installment agreement prior to submitting the offer, I/we must form is a verbatim duplicate of the official Form, and I/we agree to be
continue to make the payments as agreed while this offer is pending. bound by all the terms and conditions set forth in the official Form OTR-
Installment agreement / payments will not be applied against the 10.
amount offered.
Under penalties of perjury, I declare that I have examined this offer,
(g) OTR will keep any refund, including interest, due to me/us including accompanying schedules and statements, and to the best of my
because of overpayment of any tax or other liability, for tax knowledge and belief, it is true, correct and complete.
periods extending through the calendar year that OTR accepts
the offer. I/we may not designate a refund, to which OTR is
entitled, to be applied to estimated tax payments for the following (9a) Signature of Taxpayer-proponent
year. This condition doesn’t apply if the offer is based only on Doubt
as to Liability. Date
(h) I/we will return to OTR any refund identified in (g) received after (9b) Signature of Taxpayer-proponent
submission of this offer. This condition doesn’t apply if the offer is
based only on Doubt as to Liability.
Date
(I) The total amount OTR can collect under this offer can not be more
than the full amount of the tax liability including penalties and interest.
(j) I/we understand that I/we remain responsible for the full amount of For Official Use Only
the tax liability, unless and until OTR accepts the offer in writing and I accept waiver of the statutory period of limitations for the Office of Tax and
I/we have met all terms and conditions of the offer. Revenue.
(k) I/we understand that the tax I/we offer to compromise is and will
remain a tax liability until I/we meet all the terms and conditions of this Signature of authorized OTR Official
offer. If I/we file bankruptcy before the terms and conditions of this
offer are completed, any claim OTR files in the bankruptcy proceeding
will include the full amount of the unpaid tax. Title
(l) Once OTR accepts the offer in writing, I/we have no right to contest
in court or otherwise, the amount of the tax liability. Date
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