Kentucky Offer in Settlement Instructions

Offer in Settlement Instructions
Form 12A018
Form 12A018 (05/18)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

KENTUCKY DEPARTMENT OF REVENUE
OFFER IN SETTLEMENT APPLICATION

PREREQUISITES FOR SUBMITTING AN OFFER IN SETTLEMENT
a. Application Deposit—All applications must be accompanied by a non-refundable $500 deposit. The
deposit will be applied to your tax liability and count towards an offer amount should one be accepted.
b. Minimum Case Balance—Offers will only be reviewed and considered on cases with a balance
exceeding $3,000. If your case balance does not exceed $3,000 you will need to contact the Division of
Collections @ 502-564-4921, ext. 5354.
c. Operating Business—No offer will be reviewed or accepted on an operating business. The
Department will only review and consider offers on businesses which are closed.
d. Tax Compliance—You must file all tax returns that you were legally required to file prior to submitting
an offer. This includes Individual Income Tax returns and all returns for closed businesses and
operating businesses. If you had no Individual Income Tax filing requirement for a specific year or
period because you were not legally required to file the return, you must note the period(s) below.
Tax Period(s):______________________ Reason(s) _______________________________________________
e. Bankruptcy Proceedings—If you currently have an open bankruptcy proceeding, we cannot consider
an offer. Once the bankruptcy is closed or discharged, you may submit an offer.
f. Estimated Tax Payments—You must be current on all required estimated tax payments.

If you do not meet the above requirements, you may not submit an offer at this time.

II.

REQUIRED DOCUMENTATION DUE WITH THIS APPLICATION

Applications submitted without all required documentation will be deemed invalid. You must
provide complete and accurate financial disclosure for your entire household including that of
non-liable parties. Additional information may be requested from you at a later date.

 a. Statement of Financial Condition For Individuals, Form 12A638(I) (signed & dated)
 b. Copies of all bank account(s) statements (on all household accounts for the most recent 3 months)
 c. Proof of income (copies of the last 3 months of pay stubs for all household earners)
 d. Copy of most recent state & federal income tax returns (include W-2’s, 1099’s, and all schedules)
 e. If you are self-employed, you must also submit a Statement of Financial Condition for
Businesses, Form 12A639 (Plus the most recent corporation tax return, most recent profit/loss
statement and all business bank account(s) statements for the most recent 3 months)

 f. Recent copy of power of attorney if represented by someone other than yourself
 g. Recent copy of a credit report
 h. All documentation regarding inheritances and lawsuits either pending or resolved within the
last 12 months

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Form 12A018 (05/18)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

KENTUCKY DEPARTMENT OF REVENUE
OFFER IN SETTLEMENT APPLICATION

1. Do I need an accountant, attorney, or consultant to
help me submit an offer?
Our Offer in Settlement forms and program procedures
have been designed to be self-explanatory. You have all
of the information we need to help us make an informed
decision about your offer, and most taxpayers should be
able to complete the forms without professional
assistance. DOR officials are available Monday - Friday
to assist you with any questions you may have and to
assist you through the offer process. You are entitled to
hire the services of anyone you wish to represent you;
however, DOR must have proof of their power of
attorney privileges submitted with the offer.
2. What happens if I submit an offer without all of the
required documentation on the checklist, or if I have
not met the prerequisites for submitting an offer?
You may resubmit the offer with all of the required
documentation listed on the checklist. A new deposit
may be required.
3. Can I use the IRS Offer in Compromise forms to
submit an offer to Kentucky?
No, you must submit the required Kentucky Department
of Revenue Offer in Settlement Application and
Statement of Financial Condition Form(s). See Pages 1
and 3 for all Offer in Settlement requirements.
4. How do I know how much to offer?
Generally, the amount of your offer must equal or
exceed the amount of money the DOR could otherwise
reasonably collect from you, either immediately or
through a pay agreement. However, each offer is
reviewed on an individual, case-by-case basis. You
should explore all possible options for funding your offer,
including but not limited to liquidating assets, borrowing
from family or friends, and obtaining financing from a
lending institution. You cannot include refunds the DOR
may owe you, or payments you have previously made,
toward your offer amount.

6.

Does the DOR suspend collection activity while
reviewing my offer?
No, any ongoing collection activity before an offer is
submitted (payments, levies, etc.) is generally enforced
while the offer is in review. If there is any indication the
offer was submitted in order to delay any further
collection activity, we will continue collection efforts. If
you have special circumstances you feel the DOR
should consider in reference to any current collection
activity, you may submit a request in writing with your
offer. To protect our interest, the Commonwealth may
file a Notice of State Tax Lien, issue a Final Notice,
and/or issue a Notice of Assessment after the offer is
received if these actions have not already been taken.

7.

How will I know if my offer has been accepted or
rejected?
The DOR Officer assigned to review your offer will notify
you by mail regarding the status of your offer. The date
of the letter will be considered the official date of
acceptance or rejection.

8.

Can I withdraw my offer once I have submitted it to
the DOR?
Yes, you may withdraw your offer from consideration at
any time by written notification or by phone. Any
amounts paid or credited are non-refundable.

9.

May I submit another offer if my first is rejected?
Unless notified otherwise from a DOR Officer, you may
submit a new offer. It is unlikely that the second offer will
be given more favorable consideration than the original
unless the amount of the offer is increased.

10. What forms of payment do you accept for a
settlement?
We accept personal checks, cashier’s checks, debit
cards, and multiple types of credit cards. There is a
convenience fee for all card payments. We can accept
payments electronically over the phone for personal
checks, debit and credit cards.

5. How will the DOR consider my offer?
A DOR officer will examine your assets, liabilities, and
your ability to pay. We may request further
documentation and will verify the information you
provide. If our review of your financial condition indicates
you have the ability to pay more than you offered or DOR
may collect more than you offered, your offer will be
rejected. The officer will make a recommendation to
accept or reject your offer or may decide a larger amount
is needed. It should be strictly understood that the
acceptance of any offer is at the sole discretion of DOR.

11. Where do I file the offer in settlement?
The offer may be submitted to the collector handling
your case, or you may mail the offer and all required
documentation to:
Division of Collections
Offer in Settlement Section
P.O. Box 5222
Frankfort, Kentucky 40602
Phone: (502) 564-4921
Fax: (502) 564-7348
Website: www.revenue.ky.gov

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Form 12A018 (05/18)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

KENTUCKY DEPARTMENT OF REVENUE
OFFER IN SETTLEMENT APPLICATION

1. GENERAL PROGRAM INFORMATION

Item 6—Specify the timeframe in which you plan to pay
the offered amount. You should pay the full offered
amount in the shortest time possible. The quicker you
pay the less interest your debt will accrue. The DOR
charges interest from the date of acceptance until the
date you pay the full amount offered.

DOR Policy—The goal of this program is a settlement
which is in the best interest of the Commonwealth.
Offer in Settlement should not be the first action taken
to resolve your liability. The DOR will give full
consideration to an Offer in Settlement when it is
unlikely that we can collect the full amount owed and
when the amount you offer reasonably reflects
collection potential. The goal is to collect the most we
can at the earliest possible time, at the least cost to the
Commonwealth.

Item 7—Disclose where the source of the funds to pay
the offer will be coming from, such as personal savings,
borrowing from family or friends, liquidating an asset,
etc.
Item 8—Check the tax type(s) that you offer to settle.
If the type of liability is not on the form, specify the type
of tax and periods of liability in “OTHER TAX TYPES.”
Example: Omitted Tangible Property Tax, 12/06.

Background—Kentucky Revised Statute 131.030(3)
allows delegated officials of the Kentucky DOR to settle
a tax liability for less than the full amount due. The term
“tax liability” is the total amount a taxpayer owes
including taxes, penalties, interest, and other additional
amounts required by law.

Item 9—Provide a detailed explanation of your
circumstances, supplying additional pages or
documentation if necessary. It is your responsibility to
show the DOR why it would be in the best interest of
the Commonwealth to accept your offer.

Notice About Co-obligors—Other parties whom you
share a tax liability are co-obligors. This may be a
spouse or business partner. In most cases, the DOR
will not consider a single offer from two obligors unless
they are married. If there is a co-obligor(s) not included
on your application, the DOR may pursue them for the
remaining balance.

Item 10—It is important that you read and clearly
understand all of the terms and conditions of the offer.
Item 11—By signing Item 11(a) and/or 11(b), you
agree that:

Possible Additional Requirements—We may
require that you sign a written agreement that requires
you to pay a percentage of future earnings, and/or give
up certain present or potential tax benefits.

a. You give up any overpayments (refunds) for all tax
periods prior to and including the tax year that we
accept your offer or the tax year your offer is paid
in full- whichever is later.

2. LINE BY LINE INSTRUCTIONS FOR
APPLICATION PAGES 4 & 5
Item 1—List your full name, address and social
security number.

b. Any statutory period for assessment and collection
of the amount owed is suspended while the offer is
pending. The statute of limitations will extend by
the amount of time in OIS plus one year.

Item 2—List the full name and social security number
of a spouse or other person jointly submitting this offer
with you.

c.

Item 3—If applicable, enter the name and federal
identification number of the business for which you are
offering to resolve a tax debt.

d. The DOR can reinstate the entire amount owed if
you do not comply with all the terms and conditions
of the offer including the requirement to file returns
and pay taxes for five years.

Item 4—Check this box if you are/were a corporate
officer or equivalent office-holder of the business, and
are offering to resolve your personal liability for the
trust taxes and/or officer assessable taxes for that
business.
Item 5—Enter the total amount you are offering to
settle your debt, not including any amounts already
paid to or collected by the DOR prior to this offer.

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You will not contest, in court or otherwise, the
amount owed if the DOR accepts your offer.

KENTUCKY DEPARTMENT OF REVENUE
OFFER IN SETTLEMENT APPLICATION

Form 12A018 (05/18)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

1.

Taxpayer Name _______________________________________ Social Security Number _______ – _____ – ________
Address _____________________________________________ Daytime Telephone Number _____________________
City ________________ State ______ Zip Code ____________ Cell Number _________________________________
E-mail Address ____________________________________________________________________________________

2.

Taxpayer Name (if joint offer) _____________________________ Social Security Number _______ – _____ – ________
Address ______________________________________________ Daytime Telephone Number ____________________
City ________________ State ______ Zip Code ____________ Cell Number _________________________________
E-mail Address _____________________________________________________________________________________

3.
4.

Business Name _______________________________________ Federal ID Number ________ – __________________
 Check here if you are a corporate officer or equivalent office-holder offering to settle your personal liability for trust taxes
for the business listed above.

5.

I / we offer to pay the amount of $ ________________ (The offer must be $500 or greater.)

6.

Payment terms:  Full offered amount is enclosed or Payment will be made within:  30-days  60-days  90-days

7.

I / we shall obtain the funds to make this offer from following source(s): ________________________________________

8.

I / we submit this offer to settle the tax liabilities plus any interest, penalties, additions to tax and additional amounts required
by law for the type tax(s) and period(s) marked below. Mark “X” for each tax type, and fill in the correct periods and tax types.



INDIVIDUAL INCOME TAX for years:__________________________________________________________________



WITHHOLDING TAX for periods:_____________________________________________________________________



SALES AND USE TAX for periods:____________________________________________________________________




CORPORATE/LLET TAX for periods:__________________________________________________________________

OTHER TAX TYPES (be specific) for periods:___________________________________________________________
__________________________________________________________________________________________________
9.

Explain the circumstances that prevent you from paying the liability in full. Attach additional sheets or documentation if
needed.___________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________

You must read and sign Page 5, or your offer will be invalid.

FOR OFFICIAL USE ONLY
CASE NUMBER(S):
AMOUNT PAID: $

APPLICATION RECEIVED DATE:

APPLICATION RECEIVED BY:
AMENDED:

 YES  NO

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Form 12A018 (05/18)
Commonwealth of Kentucky
DEPARTMENT OF REVENUE

KENTUCKY DEPARTMENT OF REVENUE
OFFER IN SETTLEMENT APPLICATION

10. TERMS AND CONDITIONS: By submitting this offer, I/we have read, understand and agree to the following:
a. Voluntarily submit all payments made on this offer to the Department of Revenue (DOR);
b. The understanding there is no appeals process for rejected offers;
c. To comply with all Kentucky Revised Statutes and Administrative Regulations relating to filing tax returns and

paying required taxes for five tax years from the date the DOR accepts the offer or the date the offer was paid in
full- whichever is later;
d. To waive and agree to the suspension of any statutory period of limitation (time limits provided for by law) for DOR

assessment and collection of the tax liability for the tax periods checked on Page 4, Item 8;
e. The understanding that regardless of Offer in Settlement acceptance, rejection, or withdrawal, the DOR will not refund any

payment and/or credit from any source including, but not limited to, installment agreement payments, offsets,
overpayments, and the OIS Application Fee and apply payments made under the terms of this offer in the best interest of
the Commonwealth;
f.

The understanding the DOR will keep any refund, including interest, due because of the overpayment of any tax
or other liability for the tax year that the offer was accepted or paid in full- whichever is later and for the same
period of time, if any part of the tax liability covered by this offer is for individual income tax or withholding tax,
any federal income tax refund that may become due may be offset pursuant to 26 USC §6402(e);

g. To return to the DOR any refund identified in Item “f” received after submitting this offer;
h. To remain responsible for the full amount of the tax liability unless and until DOR accepts the offer in writing and to meet

all the terms and conditions of the offer; the understanding the DOR will not remove the original amount of the tax liability
from its records until all terms and conditions have been met;
i.

The understanding that filing bankruptcy before the terms and conditions of this offer are completed, any claim the DOR
files in the bankruptcy proceeding will be a tax claim.

j.

The offer is pending starting with the date an authorized DOR official signs this form until an authorized DOR official
accepts, rejects, or withdraws the offer in writing;

k. The waiver and suspension of any statutory period of limitation for assessment and collection of the amount of tax liability

described in Item 8 continuing to apply:
(i) while the offer is pending (see Item “j” above),
(ii) during the time the full offered amount has not been paid,
(iii) during the time all terms and conditions have not been met, and
(iv) for one additional year beyond the time periods identified in (i), (ii), and (iii) above;
l.

The understanding that if any of the terms and conditions are not met, the offer is in default and the DOR may:
(i) immediately file suit to collect the entire unpaid balance of the offer,
(ii) immediately file suit to collect an amount equal to the original amount of the tax liability as liquidated
damages, minus any payments received under the terms of this offer,
(iii) disregard the amount of the offer and apply all amounts paid under the offer against the original
amount of tax liability, and
(iv) file suit or levy to collect the original amount of tax liability without further notice of any kind; and

m.

The understanding that this offer is on behalf of only those whom sign as Taxpayer/Proponent in Item 11(a) or 11(b) and
the Commonwealth of Kentucky reserves all rights of collection against co-obligors (see Page 3).

11. MANDATORY SIGNATURE(S): Under penalties of perjury, I declare that I have examined this offer, including
accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and
complete.

_________________________________________________
a. Signature of Taxpayer/Proponent
Date

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_____________________________________________
b. Signature of Taxpayer/Proponent
Date