Owing money to the government can feel overwhelming, especially when penalties, interest, and collection activities start to build. If you're a taxpayer in Illinois facing severe financial hardship or long-standing unpaid tax debt, there may be a way to settle your balance for less than the full amount. The Illinois Offer in Compromise (OIC) is a state-administered compromise settlement program that allows eligible taxpayers to resolve past-due taxes, business taxes, and other tax liabilities by making a reasonable offer based on their ability to pay.
Unlike the IRS Offer in Compromise, the Illinois program is more limited in scope and governed by the Illinois Department of Revenue (IDOR) and its Board of Appeals. While the IRS considers multiple grounds for compromise—including doubt as to liability and effective tax administration—Illinois typically grants relief only in cases where the taxpayer’s financial condition suggests that full collection is unlikely.
This guide explains how the Illinois Department handles OIC requests, who qualifies, how to apply, and what to expect after submission. This article simplifies the process, whether you're dealing with back taxes, sales tax, withholding taxes, or business assets at risk of asset seizure, to help you take the first step toward resolving your tax debt and safeguarding your financial future.
The Illinois Offer in Compromise is a state-administered tax relief option that allows qualifying taxpayers to settle their outstanding tax liability for less than the full amount owed. It is designed for individuals and businesses who cannot fully pay their unpaid taxes and can demonstrate financial hardship or limited collection potential. The program is managed by the Illinois Department of Revenue and reviewed by its Board of Appeals.
Illinois applies a more restrictive approach, unlike the federal IRS Offer in Compromise, which accepts offers based on doubt regarding liability, collectability, or effective tax administration. The Illinois Department considers offers only when it believes a complete collection is unlikely due to the taxpayer’s financial condition. This means the compromise is generally approved only if collecting the full amount would be unrealistic within the statute of limitations.
The offer is not a negotiation over what a taxpayer wants to pay but rather a legal process that evaluates what the department can reasonably expect to recover. The Illinois program does not allow compromise when there is a disagreement over the amount owed. In those cases, taxpayers must first resolve the matter through administrative appeals or the Independent Tax Tribunal before applying.
To be considered, all tax returns must be filed, and no active appeals or audits can be pending. Offers are submitted using Form BOA-1, along with detailed financial information and documentation. Individuals and businesses—including those with income, business, sales, or withholding taxes—may apply.
The Illinois Offer in Compromise is not guaranteed, and the success rate is relatively low. However, it provides a potential path to financial resolution for delinquent taxpayers who truly cannot pay their back taxes in full without the long-term burden of accumulating interest, penalties, or further enforcement actions.
To qualify for the Illinois Offer in Compromise, taxpayers must meet strict eligibility conditions set by the Illinois Department of Revenue. The program is not available to everyone with a tax debt. Instead, it targets cases where the department believes collecting the full tax liability is unlikely due to the taxpayer’s current or projected financial situation.
The state considers several financial and situational factors when reviewing an offer. To be eligible, a taxpayer must typically demonstrate one or more of the following:
This applies to individuals and businesses, including those who owe income, business, sales, or other business taxes, such as withholding taxes or taxes tied to contractual payments. Business owners whose operations have closed may also apply.
Several factors can immediately disqualify an application, including
It's important to note that simply owing back taxes or being behind on payments does not make someone automatically eligible. Taxpayers must show that the Illinois Department cannot collect the full balance through standard enforcement tools like wage garnishment, bank account levy, or asset seizure.
Applying for an Illinois Offer in Compromise involves more than just filling out a form. Taxpayers must complete several steps, submit detailed financial documentation, and fully comply with state tax filing requirements. The Illinois Department of Revenue, through its Board of Appeals, reviews each application carefully and will not consider incomplete or non-compliant submissions.
Before applying, verify your total unpaid taxes, penalties, and interest. You can review your account by logging into MyTax Illinois or contacting the Illinois Department. Evaluate your income, expenses, and assets to determine whether your financial hardship is significant enough to justify an offer. Remember that the program is only for those who cannot pay their full tax liability.
All tax returns must be filed before you submit an offer. This includes personal income tax returns, business tax returns, and any other filings related to sales tax, withholding taxes, or other business taxes. If any returns are missing, your application will be rejected automatically.
Form BOA-1 is the official petition to request relief through the compromise settlement program. You must indicate that your petition is for an Offer in Compromise by checking the box in Section 5(b). In the form, provide
If you are represented by a tax attorney or other professional, include Form IL-2848 (Power of Attorney) with your submission.
Depending on your taxpayer type, you’ll also need to submit one of the following:
These multi-page forms require full disclosure of your financial information, including:
Inaccurate or incomplete financial disclosures can result in automatic rejection or denial later in the review process.
Attach the following documents to support your application:
This information helps IDOR evaluate your financial condition and determine whether to accept your offer.
Mail the completed forms and documents to the Board of Appeals at
Illinois Department of Revenue
Board of Appeals
555 West Monroe Street, Suite 1100
Chicago, IL 60661-3605
If you need additional information or assistance, you may also contact the Board of Appeals by phone at 312-814-3004 or via email at REV.BoardOfAppeals@illinois.gov.
If you’re facing aggressive collection actions—such as wage garnishment, bank account levy, or business asset seizure—you may request a Temporary Restraining Order (TRO) using Form BOA-1. This is not automatically granted and is approved at the discretion of the board’s chair. A TRO may pause specific other enforcement actions during the review period but does not prevent the department from issuing liens or pursuing other collection methods.
To be considered for an Illinois Offer in Compromise, submit several required forms and complete and accurate documentation of your financial situation. The Illinois Department of Revenue will not review your application unless all necessary forms are properly completed and supported with detailed records.
Here are the primary forms needed for individuals and businesses applying through the compromise settlement program:
To give the Illinois Department of Revenue a complete picture of your financial condition, you must also include:
Tax and Income Records:
Banking and Asset Information:
Debt and Expense Verification:
The more thorough and organized your financial documentation, the greater your chances of receiving a fair review. Missing records may cause delays or result in outright rejection.
Submitting an Illinois Offer in Compromise is only the beginning of the process. After receiving your completed application, the Illinois Department of Revenue and its Board of Appeals begin a multi-phase review to determine whether your offer is acceptable. The review can take several months, depending on the complexity of your case and the quality of your documentation.
While no official timeframe is guaranteed, most applications follow this general process:
The Board of Appeals considers multiple factors when deciding whether to accept an offer:
Once the review process is complete, there are several possible results:
Keep in mind that submitting an offer does not automatically pause enforcement. IDOR may continue specific other enforcement actions while your case is under review unless you've requested and received a Temporary Restraining Order.
Submitting an Illinois Offer in Compromise is a detailed process that requires accuracy, preparation, and compliance. Many applications are rejected not because the taxpayer is ineligible but due to avoidable errors. Understanding these common mistakes can help avoid delays, denials, or unnecessary enforcement actions.
Avoiding these errors increases the chances of a successful offer and minimizes unnecessary enforcement such as wage garnishment, asset seizure, or referral to collection agencies.
An Offer in Compromise is not the only way to resolve an unpaid tax debt in Illinois. Because the Illinois Department of Revenue only accepts offers in rare cases involving genuine financial hardship, other resolution options may better serve many delinquent taxpayers. These alternatives may offer quicker approval, fewer documentation requirements, and more flexible repayment terms.
You may qualify for an installment agreement if you cannot pay your full tax bill immediately but can make regular monthly payments. This option allows you to pay back taxes over time, typically without submitting extensive financial information. You’ll still be responsible for paying penalties and interest, but enforcement actions may pause once your payment plan is approved.
The Illinois Department may occasionally agree to delay collection activities if you’re experiencing temporary financial difficulty. This informal relief doesn’t erase your tax liability but can provide short-term protection from collection actions like bank account levies or wage garnishment. You must still file all required tax returns and remain compliant.
Filing for bankruptcy may be an option for taxpayers facing overwhelming debt beyond just Illinois taxes. Depending on the circumstances, some tax debts may be discharged. However, bankruptcy has serious consequences and does not eliminate all types of taxes, such as recent sales tax or withholding tax obligations. You should consult a tax attorney or bankruptcy professional before pursuing this route.
Each alternative has its pros and cons. It’s essential to assess your financial situation honestly and choose the path that offers the most realistic and sustainable solution.
The Illinois Offer in Compromise process is complex, documentation-heavy, and highly selective. Even minor errors or omissions can result in rejection or delays. That’s why many taxpayers—especially those with significant tax debts or complicated financial situations—choose to work with a qualified tax professional.
You should consider hiring a tax attorney, an enrolled agent, or a certified public accountant (CPA) if you meet the following criteria:
A tax professional can help you avoid common mistakes, prepare your financial disclosure accurately, and ensure your petition is correctly submitted to the Illinois Department of Revenue. They can also help you determine whether another resolution method—such as a payment plan or penalty abatement based on reasonable cause—may be a better option. Professional guidance can differentiate between relief and continued collection action for many delinquent taxpayers.
Confirming that your application is complete, accurate, and realistic before submitting your Illinois Offer in Compromise is important. Use this checklist to avoid delays, rejections, or additional collection activities by the Illinois Department of Revenue.
By following these steps, you improve your chances of receiving relief through the compromise settlement program and reduce the risk of further enforcement or referral to collection agencies.
Your offer should reflect what the Illinois Department of Revenue could collect based on your financial condition. This includes your income, bank account balances, personal property, and business assets. The offer amount should be realistic and supported by documentation. Proposing an unreasonably low figure may result in immediate rejection, so it’s important to calculate carefully and include all relevant financial information.
The Illinois Offer in Compromise is only available for final, uncontested tax debts. If you believe your tax liability is incorrect, you must resolve the issue through the Independent Tax Tribunal or IDOR’s appeals process. The Board of Appeals does not have the authority to change or dispute a proposed assessment. Only after the amount is final can you request compromise consideration.
Submitting an offer does not automatically pause enforcement actions like a wage garnishment or bank account levy. To request a hold on collection activities, you must include a temporary restraining order request in Form BOA-1. Approval of a TRO is not guaranteed and is at the discretion of the board’s chair. Without one, the department may continue specific enforcement actions while your offer is under review.
Your full tax bill remains due if the Illinois Department denies your offer. You cannot appeal the Board of Appeals’ decision, and collection activities may resume. However, you can reapply later if your financial situation worsens or submit a more complete application. In the meantime, consider other options like a payment plan or requesting penalty abatement based on reasonable cause.
Your offer can include the total tax debt—base tax, interest, and penalties. Occasionally, the board may approve partial relief by waiving penalties and interest while requiring payment of the core tax balance. Supporting documentation must demonstrate financial hardship and explain why full payment of interest and penalties would be unreasonable or impossible.
It’s not required, but many taxpayers benefit from professional help. A tax attorney or enrolled agent can help you complete your forms, organize supporting documents, and negotiate effectively. This service is invaluable if you owe hefty business taxes, face liquor license revocation, or have been deemed personally responsible for business liabilities. A professional can also advise you on alternatives if the offer is unlikely.
An Offer in Compromise allows you to settle your tax debt for less than the full amount owed, while a payment plan involves repaying the entire balance over time. Payment plans are easier to obtain and require less documentation, but they do not reduce your tax liability. A payment plan is the first option explored for most delinquent taxpayers before considering a compromise.
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