The Mississippi Offer in Compromise (OIC) program provides eligible taxpayers with a potential resolution for outstanding state tax liabilities when full payment would create an undue financial hardship. This settlement mechanism allows qualified individuals and businesses to satisfy their tax obligations for less than the total amount owed under specific and limited circumstances. The program is intended as a last-resort option for taxpayers unable to meet their liabilities through standard payment methods.
While the Mississippi OIC shares a similar purpose with the federal IRS Offer in Compromise, it operates independently under the rules and guidelines established by the Mississippi Department of Revenue. Unlike the IRS program, Mississippi’s OIC is granted only in rare cases and requires clear and convincing evidence that the taxpayer cannot pay the debt in full due to long-term financial constraints.
This guide provides a detailed overview of the Mississippi OIC program, including eligibility requirements, required documentation, and the steps necessary to initiate a request. Taxpayers facing enforced collection actions, mounting tax debts, or financial hardship may find this settlement option viable for resolving outstanding liabilities while avoiding further penalties or legal enforcement.
The Mississippi offer in compromise is a state-administered tax relief option that allows qualifying taxpayers to settle tax debt for less than the full amount owed. This compromise program is intended for individuals or businesses facing specific financial situations, such as long-term hardship or an inability to pay despite available collection methods. It is a legal agreement between the taxpayer and the Mississippi Department of Revenue (MDOR), resolving the debt based on what the taxpayer can reasonably afford.
This program is not available to everyone and is generally considered only in extraordinary circumstances. Applicants must demonstrate that paying the full tax liability would result in significant financial hardship or that there is doubt that the state can collect the full amount through standard collection activities. Unlike an installment agreement, which requires full repayment over time, the compromise offer allows taxpayers to pay a reduced amount based on their financial condition.
While Mississippi’s offer in compromise shares similarities with the IRS program, there are notable differences:
For taxpayers who qualify, the Mississippi offer in compromise can provide a practical alternative to complete payment, wage garnishment, or long-term payment plans. However, the state considers each application carefully, requiring detailed financial information and supporting documentation before determining whether to accept the offer.
Mississippi Code Sections 31-19-27 and 31-19-29 authorize the state to settle tax debts with offers in compromise. As the Commissioner of Revenue recommends, the governor can approve a settlement for a 'doubtful claim,' meaning MDOR cannot collect the debt through usual methods like wage garnishments or bank levies.
The MDOR and the governor's office share oversight of the program. Once a taxpayer submits an offer, the commissioner reviews the taxpayer’s financial condition, evaluates the proposed payment, and determines whether accepting the offer is in the state's best interest. Only after this review can the governor provide final approval for the compromise.
This layered approval process makes Mississippi’s program more restrictive than the federal offer in compromise administered by the Internal Revenue Service. It ensures the state only accepts reduced payments when it is clear the full amount cannot reasonably be collected.
Not all taxpayers can settle their state tax debt through a Mississippi offer in compromise. Applicants must meet strict requirements and show they cannot afford to pay the full tax liability due to their current financial condition.
To be eligible, you must meet all of the following:
Mississippi will reject an offer in compromise if any of the following apply:
The Mississippi Department of Revenue provides different application forms based on your taxpayer type:
All taxpayers follow the same rules, but documentation varies based on financial and business complexity.
The Mississippi Department of Revenue carefully reviews each compromise offer and only accepts applications that meet the legal criteria and serve the state’s financial interest. Most accepted offers fall into one of the following categories:
1. Financial Hardship
You can’t afford to pay your tax debt without sacrificing basic needs like food, housing, or medical care. This usually applies to people with low income and little to no assets.
2. Doubtful Collectability
The state believes it’s unlikely to collect the full amount—even with enforcement actions like wage garnishment or bank levies. Accepting a smaller amount now is better than collecting nothing later.
3. Special Circumstances
You’re facing significant life challenges (like a serious illness, disability, or job loss) that affect your finances. Even if you technically could pay, your situation may justify a break.
4. Best Interest of the State
The state sees your offer as the most efficient way to resolve the debt—especially if ongoing collection would be too slow, costly, or unlikely to work. A lump-sum payment can close the case faster.
Applying for a Mississippi offer in compromise requires careful preparation and accurate documentation. The following steps outline the whole application process, from determining eligibility to awaiting a decision from the Mississippi Department of Revenue.
Before you apply, make sure you meet these basic rules:
The Mississippi Department of Revenue provides three separate OIC forms depending on your taxpayer category:
Using the wrong form or omitting required fields can delay or reject processing.
Mississippi requires that your offer reflect your ability to pay based on your financial condition. The suggested minimum offer is calculated by adding:
Exemptions may apply to certain assets. For example:
If your offer is too low based on your income and assets, the MDOR may reject it.
You must include detailed financial records with your Offer in Compromise application. These help the Mississippi Department of Revenue evaluate your ability to pay. Missing documents can lead to automatic rejection.
General documentation required:
Additional documents for self-employed individuals or businesses:
Be sure your documentation is complete and up to date. Missing or outdated paperwork is one of the most common reasons offers are denied.
Carefully fill out the selected application form. Answer all questions—use "n/a" or "0" where appropriate. The form must be signed and dated, and the required down payment must be enclosed.
Failure to complete every section or include all documentation may lead to rejection without further review.
Once completed, you may mail or hand-deliver your application:
Mailing Address:
Office of Tax Enforcement
P.O. Box 23338
Jackson, MS 39225-3338
You may also apply to your nearest Mississippi Department of Revenue district office.
After submission, the MDOR will evaluate your application. During this time:
The state does not place collection actions on hold while your offer is under review, so it's important to remain proactive and responsive.
By presenting a clear, thorough, and well-documented application, you increase your chances of resolving your tax debt through the Mississippi offer in compromise program.
The Mississippi offer in compromise can be an effective way to settle tax debt, but it is not the only path to tax relief. Depending on your financial situation, one of the alternatives may help you resolve your tax liability more quickly or with fewer documentation requirements.
Taxpayers who can afford to pay their full tax bill over time may benefit from entering into an installment agreement with the Mississippi Department of Revenue. This option allows you to make monthly payments toward the full balance until the debt is paid off. The state will likely reject a compromise offer if it determines that you qualify for a payment plan.
If you cannot pay anything due to financial hardship, you may request a currently not collectible (CNC) status. This designation temporarily halts collection actions, such as wage garnishment or bank levies. While the debt remains active and continues to accrue interest, the state will not pursue payment until your financial condition improves.
If your tax debt resulted from events beyond your control—such as a serious illness, natural disaster, or job loss—you may qualify for a reduction or removal of penalties. Penalty abatement does not reduce the tax balance but can lower the total amount you owe and make repayment more manageable.
Taxpayers who believe their tax liability was incorrectly calculated may submit an amended return or request audit reconsideration. This option is appropriate if you have new or updated information that could reduce your tax bill and potentially eliminate the need for an offer in compromise.
Each alternative can offer meaningful tax relief depending on your specific financial situation. A qualified tax professional can help you determine the best path for resolving your tax debt and regaining control over your finances.
Once your Mississippi offer in compromise is accepted, you must fully comply with state tax laws to avoid having your original tax debt reinstated. The Department of Revenue sets strict post-approval conditions to ensure taxpayers continue to meet their obligations.
You must promptly file all your tax returns for at least five years after the Department of Revenue accepts your offer. You must file your yearly returns and make estimated tax payments on time. Your compromise agreement will be void if you don't meet this requirement.
You must pay your Mississippi state taxes on time now and in the future. This includes making estimated tax payments if you are self-employed or otherwise required. If you miss a payment, your agreement may end right away.
If you are responsible for filing business taxes like sales tax, employer withholding, or other trust fund taxes, you must ensure they are filed and paid on time and correctly. Your offer in compromise could be canceled if your business keeps breaking the rules.
The Mississippi Department of Revenue may cancel your agreement if you don't meet the terms in your acceptance letter. The full tax amount, including penalties, interest, and fees, will be reinstated, and collection actions like levies or garnishments may resume. Staying compliant protects your relief and financial stability. Consider consulting a tax professional.
Submitting a complete and accurate application is critical to improving your chances of having your offer accepted. Please refer to the checklist below to ensure you include all necessary forms, payments, and supporting documentation.
Your application must include the completed Mississippi offer in compromise form that matches your taxpayer category: individual, self-employed, or business entity. You must also submit a signed and notarized confidentiality waiver authorizing the department to review your personal financial information.
The state requires a nonrefundable down payment with each application. You must include either $100 or 20% of the total offer amount—whichever is greater—at the time of submission. This payment is applied to your tax debt regardless of whether your offer is approved.
To apply for the Mississippi Offer in Compromise, you must include documents that show your current financial condition, such as:
You must provide a complete inventory of your assets, including fair market values for all property you own. This includes:
If you are self-employed or applying on behalf of a business entity, you must also include:
To strengthen your application, include:
Before sending your application, verify the following:
By completing this checklist, you can prevent missing items from delaying or denying your compromise offer. A thorough application gives the Mississippi Department of Revenue everything it needs to evaluate your request for tax debt relief fairly.
The Mississippi offer in compromise is a tax relief program that lets people pay off their tax debts for less than they owe. It's for people who have a lot of trouble with money and can't pay their full tax bill. This compromise program helps taxpayers regain control of their money by legally lowering what they owe and settling their tax debt through a structured, state-approved process.
No, taxpayers with an open bankruptcy proceeding do not qualify for a Mississippi offer in compromise. Bankruptcy law limits collection actions, which conflicts with the goals of the compromise program. To apply, taxpayers must wait until the proceeding is discharged or dismissed. Once eligible, they must submit complete supporting documentation detailing their financial condition, monthly income, and ability to pay based on their financial situation.
The Mississippi offer in compromise may be used to settle most personal and business tax liabilities, including income and back taxes. However, some debts—such as trust fund taxes or those related to criminal activity—exclude eligibility. To qualify, the tax debt must be at least four years old and exceed $3,000. Taxpayers must file all required tax returns before applying for this type of tax debt relief.
No, submitting a Mississippi offer in compromise does not stop collection activities. Wage garnishment, interest, and penalties may continue while the compromise offer is reviewed. Taxpayers should be aware that unpaid balances can grow and collection actions remain active unless separate relief is granted. Unlike the IRS collection process, Mississippi does not pause enforcement simply because a compromise application has been submitted.
To determine a compromise offer amount, calculate your disposable monthly income multiplied by twelve and add the net equity of non-exempt assets. This total amount reflects what the state may accept based on your financial condition. The Mississippi Department of Revenue may exempt home equity, vehicles, or personal items. Always include required documentation and additional information to justify the offer and demonstrate that paying the full amount is impossible.
Yes, taxpayers on an installment agreement can still submit an offer in compromise. However, the department will assess your financial situation to determine whether your current payments can cover the entire tax liability. If your payment plan is sufficient, the compromise offer may be denied. The state wants to ensure that only those with genuine financial hardship and fewer payments available qualify for this relief-based settlement option.
We highly recommend working with a tax professional or a reputable tax relief company for complex situations involving businesses, detailed expenses, or unpaid balances. These experts can help file the required documentation, calculate a realistic offer, and avoid errors. Whether dealing with Mississippi or IRS tax debt, professional assistance can increase your chances of resolving tax obligations and securing a fresh start through a successful offer in compromise.
Schedule your free, confidential tax relief review today.
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