Table of Contents
Key takeaways
Here are key takeaways regarding the West Virginia CD-3 form:
- Purpose of the Form: The CD-3 form is used to propose a compromise on state tax liabilities when there is doubt about the amount owed or the ability to collect the full amount.
- Initial Payment Requirement: An initial payment must accompany the offer. This payment is part of the total amount offered to settle the tax liability.
- Documentation Needed: Taxpayers must attach a financial statement (Form 433-A and/or 433-B) and a statement explaining the reasons for the compromise.
- Compliance Obligations: Taxpayers must comply with all state tax laws for five years after the offer is accepted. Failure to comply may result in the state collecting the full liability.
- Signature Requirement: The form must be signed and dated by the taxpayer. If someone other than the taxpayer signs, a power of attorney must be included.
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Misconceptions
Misconceptions about the West Virginia CD-3 form can lead to confusion and frustration for taxpayers. Here are four common misunderstandings:
- Misconception 1: The CD-3 form guarantees acceptance of the offer.
- Misconception 2: All tax liabilities can be compromised.
- Misconception 3: Submitting the form stops all collection actions.
- Misconception 4: Future tax compliance is not necessary after an offer is accepted.
Many taxpayers believe that submitting the CD-3 form will automatically result in acceptance of their offer. However, acceptance is contingent upon the state’s assessment of the offer's reasonableness and the taxpayer's financial situation. If the state believes it can collect more through other means, the offer may be rejected.
Another common belief is that all types of tax liabilities are eligible for compromise using the CD-3 form. In reality, the form is specifically designed for cases where there is doubt about the collectibility of the tax owed. Taxpayers must demonstrate that the state is unlikely to collect the full amount.
Some taxpayers think that filing the CD-3 form halts all collection efforts. This is not true. The state may continue collection actions if it suspects the offer is a tactic to delay payment. Taxpayers must continue to meet existing payment obligations while their offer is under consideration.
Lastly, there is a misconception that once an offer is accepted, taxpayers can disregard future tax obligations. In fact, taxpayers must comply with all state tax laws for five years following the acceptance of their offer. Failure to do so can result in the state revoking the compromise agreement.
Similar forms
The West Virginia CD-3 form is similar to the IRS Form 656, which is used for submitting an Offer in Compromise (OIC) to the federal government. Both forms allow taxpayers to propose a reduced amount to settle their tax liabilities. The IRS Form 656 requires the taxpayer to provide details about their financial situation, just like the CD-3. In both cases, the taxpayer must demonstrate that the offered amount is the most the government can realistically collect. Acceptance of the offer means the taxpayer cannot contest the liability amount, aligning with the principles outlined in the West Virginia form.
Another document that parallels the CD-3 is the IRS Form 433-A, which is a Collection Information Statement for individuals. This form collects detailed financial information from the taxpayer, including income, expenses, and assets. The CD-3 also requires a financial statement to support the offer. Both documents aim to assess the taxpayer's ability to pay and justify the proposed compromise amount. The financial disclosures in both forms help the respective tax authorities evaluate the likelihood of full collection.
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The CD-3 form shares similarities with the IRS Form 433-B, which is tailored for businesses. Like the 433-A, this form gathers financial data but focuses on business operations. Taxpayers must provide evidence of their business income and expenses. The CD-3 requires similar financial disclosures to support the offer. Both forms emphasize the need for accurate and complete financial information to determine the feasibility of a compromise.
State tax forms, such as the California Form OIC, also resemble the West Virginia CD-3. California’s form allows taxpayers to propose a settlement for state tax debts, similar to the CD-3 process. Both forms require taxpayers to explain their financial hardships and justify their offer amounts. The acceptance conditions are alike as well, with both states retaining rights to collect any unpaid balance if the taxpayer defaults on the agreement.
The New York State Offer in Compromise form is another document akin to the CD-3. It provides a way for taxpayers to settle their tax debts for less than the full amount owed. Both forms require comprehensive financial documentation and a clear rationale for the proposed offer. They also stipulate that taxpayers must comply with future tax obligations for a specified period after acceptance, ensuring that the state can collect any future liabilities effectively.
Lastly, the Florida Offer in Compromise form shares key features with the CD-3. Both forms allow taxpayers to negotiate a reduced tax liability based on their current financial situation. They require detailed financial statements and a clear explanation of why the offer is reasonable. In both cases, the acceptance of the offer prevents the taxpayer from contesting the agreed-upon liability amount, creating a finality that benefits both the taxpayer and the state.
Key Facts about West Virginia Cd 3
What is the West Virginia CD-3 form?
The West Virginia CD-3 form is an Offer in Compromise form used by taxpayers to propose a settlement for their state tax liabilities. This form allows taxpayers to offer a reduced amount to the State Tax Department to resolve their tax debts. It is particularly useful when there is doubt about the taxpayer's ability to pay the full amount owed or if there are questions regarding the legitimacy of the tax liability itself.
Who can submit a CD-3 form?
Any taxpayer who owes state taxes in West Virginia and believes they cannot pay the full amount may submit a CD-3 form. This includes individuals, businesses, and partnerships. However, all tax returns must be filed before submitting the offer, and taxpayers must comply with future tax obligations for five years after acceptance of the offer.
What information is required on the CD-3 form?
The CD-3 form requires detailed information about the taxpayer, including their name, address, and Social Security or Tax Identification Number. Taxpayers must also specify the types of taxes owed, the periods for which the taxes are due, and the total liability amount. Additionally, the form requires a proposed offer amount, payment terms, and a financial statement to support the offer.
What happens after the CD-3 form is submitted?
Once the CD-3 form is submitted, the State Tax Department will review the offer. They will assess whether the proposed amount is reasonable based on the taxpayer's financial situation. If accepted, the taxpayer must adhere to the payment terms outlined in the offer. If the offer is rejected, the taxpayer may still be liable for the full amount of the tax liability.
What are the payment options available with the CD-3 form?
Taxpayers can propose different payment options when submitting the CD-3 form. This includes an initial payment made with the offer, a payment due upon acceptance, and monthly installment payments. It is crucial to ensure that the total amount offered is paid within a reasonable timeframe, generally not exceeding two years.
What are the consequences of not complying with the offer terms?
If a taxpayer defaults on any payment or fails to comply with the terms of the offer, the State Tax Department may collect the entire unpaid balance. This means that all amounts previously paid under the offer could be applied against the original tax liability, and the taxpayer may lose the benefits of the compromise.
Can a taxpayer contest the tax liability after the offer is accepted?
No, once the offer is accepted, the taxpayer forfeits the right to contest or appeal the amount of the tax liability that has been compromised. This is an important consideration for taxpayers before submitting the CD-3 form, as it finalizes their agreement with the State Tax Department.
Is there any documentation required to support the CD-3 form?
Yes, taxpayers must attach a financial statement (Form 433A and/or Form 433B) along with the CD-3 form. This documentation should provide a clear picture of the taxpayer's financial situation, including assets, income, and expenses. The State Tax Department may request additional information to verify the taxpayer's ability to pay.
Preview - West Virginia Cd 3 Form
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Offer In Compromise |
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Names and Address of Taxpayer |
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Taxpayer Representative |
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Social Security or Tax Identification Number |
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To: State Tax Commissioner |
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Amount of Offer |
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Total Liability |
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[1]This offer is submitted by the taxpayer to compromise a state tax liability for the following taxes and periods:
TYPE TAX |
PERIODS |
TAX |
INTEREST |
ADDITIONS |
TOTAL |
[2]The total amount of $__________________ is offered to compromise this liability. The total amount will be paid as follows:
a)Initial Payment (with this offer): $_____________
b)Payment on Acceptance of Offer: $____________
c)Monthly Payment: $_______________ for ________ Month
Interest at the legal rate under W. Va. Code
As a part of the consideration for this offer, the Taxpayer agrees that:
[3]The State shall retain all payments and credits made to this liability prior to submission of this offer, and the State shall retain any overpayments or refunds to which the taxpayer may be entitled for periods extending to the end of the year in which this offer is accepted, or until the amount of the offer is paid in full. Any such refund received by the taxpayer after this offer is filed will be returned immediately.
[4]All payments made under the terms of this offer shall be applied in the best interest of the State.
[5]Upon acceptance of this offer, the taxpayers will have no right to contest the amount of the liability compromised.
[6]If there is a default in any payment or other terms, including Item B, the State may collect the entire unpaid balance of the offer, or may disregard the amount of the offer and apply all amounts previously paid under the offer against the liability sought to be compromised and, without further notice of any kind, assess and collect the total liability.
[7]The taxpayer agrees to the suspension of the period of limitations on assessment and collection until the total amount of the offer is paid, and there is full compliance with all terms and conditions of the compromise and for one year thereafter. Any compromise shall constitute an agreement to extend the statutes of limitation under Code
[8]Any compromise is conditioned upon the taxpayer timely complying with all state tax laws regarding filing returns and payment of taxes for a period of 5 years after the offer is accepted.
[9]A financial statement (433A and/or 433B), and a statement of the facts and reasons as grounds for this compromise, must be attached.
[10]The taxpayer remains liable for the full amount of the liability, unless and until the offer is accepted in writing by the Commissioner or a delegated official, and there has been full compliance with the terms of the offer.
Under penalties of perjury, I declare that I (we) have examined this offer, including accompanying statements, and to best of my (our) knowledge and belief it is true and correct and complete, and that I am authorized to make this offer on behalf of the taxpayer.
Name of Taxpayer(s)
By
Its
Signature
Date
OFFERS IN COMPROMISE - INSTRUCTIONS
Authority
W. Va. Code
Reason for Compromise
We are allowed to compromise a liability for one or both of the following two (2) reasons: (1) doubt as to whether the taxpayer owes the liability; (2) doubt that we can collect the full amount of the liability. This form and instructions is only used in cases of doubt as to collectibility.
Policy
We will accept an offer in compromise when it is unlikely that we can collect the tax liability in full, and the amount offered reasonably reflects the amount we can collect. An offer in compromise is a legitimate alternative to declaring a case as currently not collectible or to a
The success of the compromise will be assured only if taxpayers make adequate compromise proposals consistent with their ability to pay the State. Taxpayers are expected to provide reasonable documentation to verify their ability to pay. The goal is a compromise which is in the best interest of both the taxpayer and the State. Where an offer in compromise appears to be a workable solution, the employee assigned the case will discuss the compromise with the taxpayer and, when necessary, assist in preparing the required forms. The taxpayer will be responsible for making the first offer for compromise.
Practical Consideration
It is the taxpayer's responsibility to show us why it would be in our best interest to accept your proposal. When we consider your offer we ask the following questions: (1) Could we collect the amount owed through liquidation of your assets or through an installment agreement? (2) Could we collect more from your assets and future income than is offered? (3) Would collection in the future result in more payment than is offered? (4) Would the public believe that the acceptance of your offer was a reasonable action?
The fact that you have no assets or income at this time from which the State could collect the liability does not mean that the State should simply accept any offer because it is all we can collect now. It would generally be better for us to reject a nominal amount and wait to see what collection potential would arise during the remainder of our
Additional Consideration
We believe that you benefit if we accept your offer because you can manage your finances without the burden of a tax liability. Therefore, we may require either: (1) A written agreement that will require you to pay a percentage of future earnings; and/or (2) A written agreement to give up present or future tax refunds.
Tax Compliance
(1)We will not accept your offer if you have not filed all tax returns. (2) We will also require that the taxpayer comply with all future filing and payment requirements. The terms of the offer require future compliance for a period of five (5) years.
Collection and Payments
The submission of an offer does not automatically suspend collection. If it appears the offer was filed to delay collection of the tax or that delay would hinder our ability to collect the tax, we will continue collection efforts. If you have agreed to make installment payments before you made the offer, those payments should continue.
Special Instructions for Offer in Compromise Form
(1)The Offer in Compromise form must be used to submit an offer. The form must be filed with the Compliance Division. If you have been working with a specific employee on your case, file the offer with that employee.
(2)Your full name, address and taxpayer identification number(s) must be entered at the top of the Offer form. If this is a joint liability (husband and wife) and both wish to make an offer, both names must be shown. If you are individually liable for a liability and are also jointly liable for another liability, and only one person is submitting an offer, only one offer must be submitted. If you are individually liable for one liability and jointly liable for another and both joint parties are submitting an offer, two (2) Offers must be submitted, one (1) for separate liability and one (1) for the joint liability.
(3)You must list all liabilities to be compromised in item (1). The types of tax, the periods, and the amounts must be specifically identified.
(4)The total amount you offer must be entered in item (2). The amount must not include any amount which has already been paid or collected on the liability. The amount submitted with the offer is entered in 2(a); the amount is to be paid on acceptance of the offer is entered in (2) (b) and any amount to be paid in installments, is entered in 2(c) in item 2. You should pay the amount of the offer in the shortest time possible, or we will reject your offer. Under no circumstances should the payment extend beyond two (2) years. Interest is due at the legal rate from the date of acceptance to the date of full payment.
(5)You must state in detail in item (9) why the State should accept your offer. Attach additional pages as necessary. Describes in detail why you believe the State cannot collect more than offered from your assets and your present and future income.
(6)The taxpayer(s) must sign and date the offer. If a person other than the taxpayer signs the offer, a power of attorney must be submitted with the offer.
(7)Form
What You Are Agreeing To
Please read the Offer in Compromise Form carefully so that you understand that you are agreeing to:
(1)The period for collection is suspended while the offer is pending, while any amount offered remains unpaid, and for one (1) year after all terms and conditions of the offer are fulfilled.
(2)You won't contest or appeal the amount of the liability if your offer is accepted.
(3)You give up of overpayments (refunds) for all tax periods through the year the offer is accepted, and until the amount of the offer is paid in full.
(4)The collection of the entire tax liability, if you do not comply with all the terms of the offer, i.e. payment, future compliance.
Documents used along the form
The West Virginia Offer in Compromise Form CD-3 is an essential document for taxpayers seeking to resolve their state tax liabilities. However, it is often accompanied by several other forms and documents that provide necessary information and context for the offer. Understanding these additional forms can help streamline the process and improve the chances of a successful compromise.
- Form 433-A: This is a Collection Information Statement for Individuals. It provides a detailed overview of the taxpayer's financial situation, including income, expenses, assets, and liabilities. This information helps the state assess the taxpayer's ability to pay.
- Form 433-B: Similar to Form 433-A, this form is designed for businesses. It collects financial information about the business, including its income, expenses, and assets. This is crucial for evaluating the business's capacity to meet tax obligations.
- Power of Attorney: If someone other than the taxpayer is submitting the offer, a Power of Attorney form is necessary. This document authorizes the representative to act on behalf of the taxpayer in all matters related to the tax liability.
- Financial Statements: Supporting financial statements may be required to verify the information provided in Forms 433-A and 433-B. These could include bank statements, pay stubs, and other documentation of income and expenses.
- Letter of Explanation: This letter outlines the reasons for the offer in compromise. It should detail why the taxpayer believes they cannot pay the full amount owed and provide context for the offered amount.
- Tax Returns: Copies of recent tax returns may be required to ensure that the taxpayer is compliant with filing requirements. All returns must be filed to be eligible for an offer in compromise.
- Proof of Payments: Documentation showing any payments made towards the tax liability should be included. This helps establish the taxpayer’s history of compliance and payment.
- Asset Valuation Documents: These documents provide evidence of the current value of the taxpayer's assets, such as real estate appraisals or vehicle valuations. They support the financial statements submitted.
- Income Documentation: Proof of income, such as recent pay stubs or profit and loss statements for businesses, is essential for assessing the taxpayer's financial situation.
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- Compliance Confirmation: A statement confirming that the taxpayer is in compliance with all state tax laws and has filed all necessary returns is often required. This shows good faith in the compromise process.
In summary, while the West Virginia CD-3 form is a critical component of the offer in compromise process, several other forms and documents play a vital role in supporting the offer. By gathering and submitting these additional materials, taxpayers can present a comprehensive case to the State Tax Department, potentially increasing the likelihood of a favorable outcome.