Instructions for Form 5181
Michigan Offer in Compromise
An Offer in Compromise
Offer based on doubt to collectability – individual or
sole proprietor. If you are unable to pay the tax debt in full,
An offer in compromise (offer) is an agreement between you
complete Form 5181, Offer in Compromise, and Form 5183,
(the taxpayer) and the Michigan Department of Treasury
Schedule 2a (Individuals) – Collection Information Statement
(Treasury) that settles a tax debt for less than the full amount
for an Offer in Compromise, and provide all requested
documents and information. This will be used to evaluate
whether your offer is appropriate for compromise based on
your assets, liabilities, income, expenses, and future earning
Before submitting an offer, you must:
• have led all tax returns that it is legally required to le;
Offer based on doubt to collectability – business. If your
business is unable to pay the tax debt in full, complete Form
• have been assessed for the tax liabilities included in the
5181, Offer in Compromise, and Form 5184, Schedule 2b
submitted offer in compromise;
(Business) — Collection Information Statement for an Offer
• no longer have the opportunity to contest the assessed tax
in Compromise, and provided all requested documents and
liability in informal conference; and appeals of the assessed
information. This will be used to evaluate whether your offer
tax liability to the Michigan Tax Tribunal or a court must have
is appropriate for compromise based on your business assets,
liabilities, income, expenses, and future earnings potential.
• not be in an open bankruptcy proceeding.
NOTE: A business is dened as a corporation, partnership,
If any of these circumstances do not exist, you are ineligible
limited liability company, limited liability partnership or
for consideration of an offer in compromise.
any business entity that is operated as other than a sole-
How to submit an offer
NOTE: If your offer is based on more than one ground
You must complete and le Form 5181, Michigan Offer in
(e.g., doubt as to liability and doubt as to collectability) the
Compromise, and the required Schedules applicable to the
applicable Schedules and required documents for both forms
grounds for submitting your offer and submit all required
must be submitted with the offer.
documents and information supporting your offer.
Joint and separate tax liability. If you have joint liability
All offers require payment of a non-refundable initial offer
with your spouse and one of you also has separate liability, you
payment of $100.00 or 20% of the offer amount, whichever is
and your spouse will need to send in one Form 5181 with the
required Schedules for the joint liability, and a second Form
5181, with the required Schedules, for the separate liability.
Grounds for submitting an offer
Individual and business liability. If you have both individual
Offer based on doubt as to liability. If you have a legitimate
and business liability that you wish to compromise, you will
doubt that you do not owe part or all of the tax liability,
need to send in one Form 5181, with the required Schedules,
complete Form 5181, Michigan Offer in Compromise, and
for the individual liability, and a second Form 5181, with the
Form 5185, Schedule 3 — Doubt as to Liability in an Offer in
required Schedules, for the business liability.
Include an explanation of why you do not owe all or any part of
the tax debt and provide any supporting documentation.
Treasury may accept or reject your offer, or determine an
Offer based on receipt of a federal offer in compromise.
amount that Treasury would consider an acceptable offer in
If you have received a federal offer in compromise from the
compromise if submitted.
Internal Revenue Service (IRS), complete Form 5181, Offer in
Submitting an offer does not ensure that the Treasury will
Compromise, and Form 5182, OIC Schedule 1 — Information
supporting a Michigan offer in compromise, based on an
accepted federal offer in compromise.
Accepting an offer. If your offer is accepted, Treasury will
notify you and any designated representative you identify by
Proof of acceptance of a federal offer in compromise must be
included with your submission.
Default on an accepted offer. If you default on the terms of an
NOTE: Only an assessed tax liability for individual income
accepted offer, your compromise may be revoked and you will
tax, under MCL 206.1 to 206.532, or for corporate income tax,
be responsible for payment of the full amount of your assessed
under MCL 206.601 to 206.699, is eligible for compromise on
tax debt, including any additional interest and penalty accruals
from the date of the original assessment.