Resolving outstanding tax obligations with the Illinois Department of Revenue can be extraordinarily frustrating and stressful. The Department is notoriously strict with payments and down payments required for an installment arrangement, and the collections department is known for having a quick levy trigger.
Luckily, the Illinois Department of Revenue offers an Offer in Compromise program, which is a legal way to settle tax debt for less than what is owed. This program is different and operates independently of an IRS Offer in Compromise and has vastly different eligibility criteria.
What Is the Illinois Department of Revenue’s Offer in Compromise?
The Illinois Department of Revenue, through its Board of Appeals, offers taxpayers an opportunity to compromise (or settle) a tax obligation for an amount that is less than is due and owing, based on a taxpayer’s future collectibility. The IDOR Offer in Compromise program is authorized by Ill. Admin. Code tit. 86, § 210.115 and 20 ILCS 2505/2505-250, which provides for the method of compromise and authorizes the Board of Appeals to administer the program.
The program allows the Department of Revenue to forgive a portion of the tax, penalty, and interest due and owing if the taxpayers do not have the financial resources to pay the liability in full. In addition, the Board of Appeals is a “board of equity” and has latitude to work with taxpayers who have compelling reasons for falling behind on tax obligations to the State of Illinois.
This is in contrast to the Federal Offer in Compromise program, which has a much more stringent set of criteria required to allow the IRS to settle a debt for less than what is owed when a taxpayer has the means to make a payment.
Who Qualifies for an IDOR OIC?
To have an Illinois Offer in Compromise eligible for review, there must be:
- A tax debt that is final and not under active appeal
- An inability to pay in full without creating a hardship
- All required tax returns on file with the Department of Revenue
- No active criminal tax investigation
Types of IDOR OIC Cases We Handle
Individual income tax assessments:
For individual taxpayers who have fallen behind on tax payments to IDOR, the amount owed, when combined with penalty and interest, can be crippling. The Illinois Department of Revenue will review collectibility, along with a taxpayer’s narrative, in determining how it can best help the individual get back into compliance while relieving some of the pressure on the back tax obligations.
Business Tax assessments
For businesses, this may include corporate income tax obligations, sales and use tax obligations, and withholding tax obligations. A business may have one or all three of these requirements, and the Department of Revenue is particularly aggressive when a business owes money. This is particularly true when a business has collected sales taxes or employment taxes (that were obtained from others for IDOR’s benefit) and not remitted those taxes to the government.
The IDOR OIC Application Process
- Compliance and Financial analysis and eligibility review: The firm must first ensure that all required tax returns are on file with the Department of Revenue. It is also imperative to determine that there are no ineligible debts to be compromised, such as a restitution payment awarded from a court. Once eligibility is confirmed, the Firm will recommend a starting offer amount to make to IDOR.
- Preparation of the OIC form and required financial disclosures: The firm will carefully prepare the required forms to get the case to the Board of Appeals and provide them with jurisdiction. It is imperative that all instructions are followed, and each submission is evaluated to put the client in a possible position for a compromise.
- Request a Temporary Restraining Order: It takes several months for the Board of Appeals to assign an OIC for review. During that time, it is imperative to ask the Department of Revenue for a Temporary Restraining Order, which will limit IDOR’s ability to take enforced collection action while awaiting Offer in Compromise review.
- Hearing Officer Review: The Illinois Department of Revenue will assign one of its hearing officers to review the Offer in Compromise. A hearing officer will review the taxpayers income, expenses, and assets when making a collectibility determination. However, as the Board is interested in equity, often the review will also include a meeting with the taxpayer to allow their story to be told. The firm will prepare the taxpayer before the hearing to ensure that when credibility, sincerity, and the ability to reform moving forward are judged, those are viewed positively in the eyes of the Department.
- Acceptance, rejection, or counteroffer: The Department will either accept a taxpayer’s offer and terms, reject it outright, or propose a counteroffer. Illinois Offers in Compromise can take the form of lump sum payments or payment plans over as many as six years. The three Board members of the Board of Appeals must sign off on a hearing officer’s recommendation before it becomes final.
Why Hire a Tax Attorney for an Illinois OIC?
An experienced Illinois tax attorney can make all the difference when trying to negotiate offers in compromise with the Department of Revenue. Illinois evaluates cases both on the merits of collectibility as well as equity, so it is important to both tell a story with numbers and with narrative.
Applying for an Offer in Compromise without an experienced attorney could result in the submitted offer being returned for applying without proper documentation, continued collection activity for not properly documenting a need for a temporary restraining order, and not having a tax liability settled for not detailing the benefit to the Department of Revenue and the taxpayer.
The Law Offices of Michael Raff has substantial experience navigating the Board of Appeals Offer in Compromise review process, and has shepherded countless taxpayers to a successful reduction in the amount owed to the Department of Revenue.
Illinois OIC vs. IRS OIC
Many assume that settling with Illinois means a settlement with the IRS is also obtainable. It is important to note that the IRS and Illinois OIC programs are not interchangeable.
Feature | IRS OIC | IDOR OIC |
Governing body | IRS | Illinois Department of Revenue |
Availability | Narrower | Broader |
Common basis | Doubt as to collectability | Must be final debt + strict hardship or doubt |
Penalties/Interest | Included as part of the overall OIC balance | In certain cases, Illinois will be more likely to remove penalties and interest over other balances |
Frequently Asked Questions
How much can I settle my Illinois tax debt for?
Each taxpayer case is unique, and the answer will be based on what caused the balance due, how old the balance is, and what the taxpayer’s income, expenses, and assets are.
Can I apply for both IRS and Illinois Offers in Compromise?
Yes, you can apply for both the IRS and Illinois Offer in Compromise programs, but the agencies review different criteria for settling an offer, and being accepted into one program does not guarantee a settlement for the other.
What if my offer is rejected by IDOR?
If your Illinois Department of Revenue Offer in Compromise is rejected, then a taxpayer will have to look for an alternative resolution option, such as an installment agreement to pay the balance due over time via monthly payments.
How long does the IDOR OIC process take?
The Illinois Department of Revenue OIC process typically takes between 12-15 months to complete. There is a good amount of work required to get the Offer in Compromise ready for submission, and more that is required when the OIC is assigned for hearing officer review. The months in the middle are typically when temporary restraining order payments are made to avoid other enforced collection activities.
Can a business submit an OIC to IDOR?
Yes, a business can submit an Offer in Compromise to the Illinois Department of Revenue to settle past due business income, sales, and use, and withholding taxes. The Department is more stringent with accepting OICs from businesses with past due sales, use, and withholding taxes, but an experienced Illinois tax lawyer can help you evaluate whether the condition is appropriate to seek a settlement.
Maximize Your Chances of IDOR OIC Approval
Don’t let overwhelming tax obligations control your financial future. The Illinois Offer in Compromise program could provide the relief you need—but navigating the application process requires expertise, precision, and a strategic approach.
The Law Offices of Michael Raff has helped many taxpayers successfully reduce their tax debt through the IDOR OIC program. With extensive experience before the Board of Appeals, we know how to present your case for maximum impact—combining strong financial documentation with a compelling narrative that demonstrates both your inability to pay and your commitment to compliance.
Time is critical. While your OIC application is under review, enforced collection actions can threaten your assets and peace of mind. Our team will work swiftly to secure a Temporary Restraining Order and build the strongest possible case for acceptance.
Schedule your consultation today to discuss your eligibility and explore your options. Call us at 847-553-4800 or schedule a free consultation online.