What Is an Offer in Compromise?

An offer in compromise is a proposal to settle your tax bill for less than the full amount due.

We will consider granting offers in compromise to individuals and businesses for the following reasons:

  • You’re currently experiencing financial hardship and can show that you’re not able to pay the full amount you owe (doubtful collectibility).
  • Extenuating circumstances kept you from filing or paying your taxes on time, and you’ve accrued over $2,000 in penalties (waiver of penalty).
    • For penalty amounts less than $2000, you can request a penalty waiver through Customer Service. Find more details here. 
  • You may not be liable for the amount assessed (doubtful liability)

How to Request an Offer in Compromise

1. Complete the required form

Doubtful Collectibility (Financial Hardship)

To request an offer in compromise due to financial hardship (doubtful collectibility), complete a Doubtful Collectability Package, and include all required forms and supporting documents:

Before completing the package, use the IRS Offer in Compromise Pre-Qualifier to see if you are eligible.

Additional Information:

  • We require a non-refundable $50 fee with your application.
    • The fee may be waived under certain conditions. See the Doubtful Collectibility Package for details.
    • The fee is not applied to the balance owed.
  • We will review your completed offer and send a written response within 60 days.
    • We will not consider your offer unless all currently due tax returns are filed and processed.
    • Incomplete applications or forms with missing documentation will be denied. See the Doubtful Collectibility Package for a list of required and recommended documents to include with your application.
  • If we accept your offer, you may pay it in full or through installments of up to 5 months. If you require more than five months for repayment, see payment plan options.
  • To secure the debt, we will file a Memorandum of Lien while your offer is being considered. It will be released when the debt has been paid.
Waiver of Penalty or Doubtful Liability

To request an offer in compromise for waiver of penalty or doubtful liability, complete the appropriate form and include all required documentation:

2. Mail the form and documentation

Mail your required forms and all supporting documentation to:
Tax Commissioner
Virginia Department of Taxation
PO Box 2475
Richmond, Virginia 23218-2475

We will consider your offer based on all available information. If the Tax Commissioner accepts your offer, we will remove any amounts waived from your bill. If your offer is not accepted, you must pay the balance of the bill in full.

See the Taxpayer Bill of Rights for more information.