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The West Virginia CD-3 form is an important document for taxpayers seeking to settle their state tax liabilities through an Offer in Compromise. This form allows individuals to propose a reduced amount to satisfy their tax debt when there are doubts about the validity of the liability or the ability of the state to collect the full amount. The form requires taxpayers to provide their personal information, including names, addresses, and Social Security or Tax Identification Numbers. It outlines the total tax liability, including interest and any additional penalties, and specifies how the taxpayer intends to pay the offered amount. An initial payment is required, followed by a payment upon acceptance and subsequent monthly installments, if applicable. By submitting this offer, taxpayers agree to certain conditions, such as the retention of prior payments and the suspension of the statute of limitations on collection until the offer is fulfilled. It’s crucial for taxpayers to attach a financial statement and a detailed explanation of their reasons for the compromise. Understanding the CD-3 form and its requirements can help taxpayers navigate the process more effectively, making it a valuable tool for those facing tax difficulties.
Preview - West Virginia Cd 3 Form
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West Virginia State Tax Department |
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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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Name: |
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Address |
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Phone |
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Social Security or Tax Identification Number |
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To: State Tax Commissioner |
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Date |
Amount of Offer |
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Total Liability |
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$ |
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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.
Document Specifics
| Fact Name | Fact Description |
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| Form Title | West Virginia State Tax Department Offer In Compromise Form CD-3 |
| Governing Law | W. Va. Code §11-10-5q(c) governs the compromise of tax liabilities. |
| Purpose | This form is used to propose a compromise for state tax liabilities. |
| Payment Structure | Offers may include an initial payment, payment upon acceptance, and monthly payments. |
| Interest Accrual | Interest will accrue on any unpaid balance at the legal rate under W. Va. Code §11-10-17. |
| Compliance Requirement | Taxpayers must comply with all tax laws for five years after the offer is accepted. |
| Documentation Needed | A financial statement (Forms 433A and/or 433B) must accompany the offer. |
| Default Consequences | If payments default, the state may collect the full unpaid balance without further notice. |
| Taxpayer Liability | The taxpayer remains liable for the full amount until the offer is accepted in writing. |
West Virginia Cd 3: Usage Instruction
Completing the West Virginia CD-3 form is an important step for taxpayers seeking to settle their tax liabilities. Once you have filled out the form, it must be submitted to the West Virginia State Tax Department for review. Ensure that all required documentation is attached to support your offer.
- Enter your information: At the top of the form, provide your full name, address, and taxpayer identification number. If applicable, include both names for joint liabilities.
- Specify liabilities: In item (1), list all taxes you want to compromise, including the types, periods, and amounts owed.
- State your offer: In item (2), indicate the total amount you are offering to settle your tax liability. Break this down into the initial payment, payment upon acceptance, and any monthly payments.
- Detail your reasoning: In item (9), explain why you believe the state should accept your offer. Attach additional pages if necessary to fully describe your financial situation.
- Sign and date the form: Ensure that the taxpayer(s) sign and date the offer. If someone other than the taxpayer is signing, include a power of attorney.
- Attach required documents: Include Form 433-A and/or Form 433-B, along with supporting documentation to verify your financial information.
After submitting the completed form, the State Tax Department will review your offer. They may reach out for additional information or clarification if needed. Be prepared to respond promptly to any requests to facilitate the process.
Learn More on 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 individuals or businesses to offer a reduced amount to the state in order to settle their tax debts. The offer is considered when there is doubt about the taxpayer's ability to pay the full amount owed. It is important to fill out this form accurately and provide all necessary documentation to support the offer.
Who should use the CD-3 form?
The CD-3 form is intended for individuals or businesses in West Virginia who owe state taxes and believe they cannot pay the full amount. This might be due to financial hardship, lack of assets, or other circumstances that make it difficult to meet the tax obligation. If you are facing significant tax debt and are unsure about your ability to pay, this form may be a suitable option for you.
What information do I need to provide on the CD-3 form?
When completing the CD-3 form, you will need to provide several key pieces of information:
- Your name and address, along with your Social Security number or Tax Identification number.
- The total amount of tax liability you are seeking to compromise, including details about the types of taxes and periods involved.
- A proposed payment plan, including an initial payment, a payment upon acceptance of the offer, and any monthly payments you plan to make.
- A financial statement (Form 433-A and/or 433-B) that outlines your assets, income, and expenses to demonstrate your inability to pay the full amount.
Be sure to provide detailed reasons for your offer, explaining why you believe the state cannot collect more than the amount you are proposing.
What happens after I submit the CD-3 form?
Once you submit the CD-3 form, the state will review your offer. During this time, collection efforts may continue unless you have made arrangements to suspend them. The state will evaluate your financial situation and the reasons you provided for your offer. If your offer is accepted, you will need to comply with the terms outlined in the agreement, including making the agreed-upon payments and adhering to future tax compliance for five years. If you fail to meet these terms, the state may pursue the full amount of your tax liability.
What are the potential outcomes of submitting a CD-3 form?
There are a few possible outcomes when you submit the CD-3 form:
- Your offer may be accepted, allowing you to settle your tax liability for a reduced amount.
- Your offer may be rejected, in which case you will still be responsible for the full tax amount owed.
- The state may propose a counteroffer if they believe they can collect a higher amount based on your financial situation.
Understanding these outcomes can help you prepare for the next steps in managing your tax obligations.
Common mistakes
Filling out the West Virginia CD-3 form can be a daunting task, and many individuals make common mistakes that can hinder their offer in compromise. One frequent error is failing to provide complete and accurate personal information. This includes the taxpayer's full name, address, and Social Security or Tax Identification Number. Omitting any of these details can lead to delays or even rejection of the offer.
Another mistake often seen is not clearly specifying the tax liabilities being compromised. In item (1) of the form, it is crucial to list all types of taxes, periods, and amounts. Incomplete or vague entries can create confusion and may result in the state not fully understanding the offer, thereby increasing the chances of denial.
Many individuals also underestimate the importance of the total amount offered. In item (2), the taxpayer must ensure that the total amount reflects what they can realistically pay. This figure should not include any payments already made on the liability. If the offer amount appears too low or unrealistic, it may be dismissed outright.
Additionally, failing to attach the required financial statements can be detrimental. The form mandates that taxpayers submit a financial statement (Forms 433-A and/or 433-B) along with a detailed explanation of why the offer should be accepted. Without this supporting documentation, the offer lacks the necessary context and justification, which could lead to rejection.
Another common oversight is neglecting to sign and date the form properly. If someone other than the taxpayer signs the document, a power of attorney must be included. Failure to adhere to this requirement can invalidate the offer, leaving the taxpayer in a precarious position.
Furthermore, individuals often overlook the importance of compliance with future tax obligations. The form requires taxpayers to comply with all state tax laws for five years after acceptance of the offer. Ignoring this condition can result in the state revoking the compromise, leading to further financial distress.
Lastly, many people do not take the time to explain their circumstances adequately in item (9). Providing a detailed account of why the state should accept the offer is essential. This includes demonstrating why the state cannot collect more than what is being offered. A lack of detail can weaken the case and make it less persuasive to the tax authorities.
Documents used along the form
The West Virginia CD-3 form is a critical document for taxpayers looking to settle their state tax liabilities through an Offer in Compromise. Along with this form, there are several other documents that may be necessary to support your case. Below is a list of commonly used forms and documents that can accompany the CD-3 form.
- Form 433-A: This is a Collection Information Statement for Individuals. It provides detailed information about your financial situation, including income, expenses, assets, and liabilities. This form helps the state assess your ability to pay your tax debt.
- Form 433-B: Similar to Form 433-A, this is the Collection Information Statement for Businesses. It is used by business owners to present their financial status, including business income and expenses, to the state.
- Financial Statements: A comprehensive financial statement may be required to further substantiate your offer. This document outlines your financial health and supports your claim for a compromise.
- Statement of Facts: This statement explains the reasons for your offer and why you believe the state should accept it. It should detail any circumstances that affect your ability to pay.
- Power of Attorney: If someone else is submitting the offer on your behalf, you will need to provide a Power of Attorney form. This document grants them the authority to act for you in tax matters.
- Tax Returns: Copies of your recent tax returns may be necessary to demonstrate compliance with filing requirements. This is essential since all tax returns must be filed to qualify for an Offer in Compromise.
Having these documents prepared and organized can streamline the process and enhance your chances of a successful compromise. Make sure to review each document carefully to ensure accuracy and completeness before submission.
Similar forms
The West Virginia Offer In Compromise Form CD-3 shares similarities with the IRS Form 656, which is used for federal tax liabilities. Both forms allow taxpayers to propose a settlement for their tax debts when there is doubt about the liability or the ability to pay in full. They require detailed financial information to assess the taxpayer's situation. The acceptance of either offer results in the taxpayer agreeing not to contest the liability amount, and both forms necessitate compliance with future tax obligations for a specified period after acceptance.
Another comparable document is the California Form OIC, which also serves as an Offer In Compromise for state tax liabilities. Like the CD-3, it requires taxpayers to provide a comprehensive financial statement. Both forms aim to settle tax debts when full payment is unlikely. They include provisions for initial and monthly payments, and both documents stipulate that taxpayers must remain compliant with tax laws for a designated timeframe following the acceptance of the offer.
The New York State Form OIC is similar in function to the West Virginia CD-3. It enables taxpayers to settle their tax debts for less than the full amount owed. Both forms require a financial disclosure to support the offer and include terms for payment plans. Upon acceptance, taxpayers relinquish the right to contest the tax liability, and both forms mandate adherence to future tax obligations for a set duration.
The Florida Offer In Compromise application also resembles the CD-3 form. It allows taxpayers to negotiate a settlement of their tax debts based on their financial situation. Both forms require a detailed financial statement and outline specific payment terms. Additionally, both forms stipulate that if the taxpayer defaults on the agreement, the tax authority may pursue the full amount owed without further notice.
Similarly, the Illinois Offer In Compromise form serves the same purpose as the West Virginia CD-3. It provides a way for taxpayers to settle their tax debts under certain conditions. Both forms require the submission of financial documentation to justify the offer amount. They also include clauses that prevent taxpayers from contesting the liability after acceptance and require compliance with tax laws for a specified period following the agreement.
The Texas Offer In Compromise form is another document that parallels the West Virginia CD-3. It allows taxpayers to propose a settlement for their tax liabilities when full payment is not feasible. Both forms require comprehensive financial information and establish terms for payment. Additionally, both documents include provisions that the taxpayer must comply with future tax obligations after the offer is accepted.
Lastly, the Ohio Offer In Compromise form shares similarities with the CD-3. It enables taxpayers to negotiate a settlement for their tax debts when there is doubt about the liability or collectibility. Both forms require a financial statement and outline payment terms. They also stipulate that if the taxpayer fails to comply with the terms of the offer, the tax authority may pursue the entire liability amount without additional notice.
Dos and Don'ts
When filling out the West Virginia CD-3 form for an Offer in Compromise, it’s crucial to approach the process carefully. Here’s a list of things to do and avoid to help ensure your application is processed smoothly.
- Do provide accurate personal information, including your name, address, and taxpayer identification number at the top of the form.
- Do list all tax liabilities you wish to compromise, specifying the types of tax, periods, and amounts.
- Do clearly state the total amount you are offering to compromise your tax liability.
- Do attach a financial statement (Form 433-A and/or 433-B) to support your offer.
- Do sign and date the form to validate your offer; if someone else signs, include a power of attorney.
- Don't forget to include any payments already made towards the liability in your total offer amount.
- Don't submit your offer without detailing why the state should accept it; provide a thorough explanation.
- Don't ignore the requirement to comply with all future tax laws for five years after acceptance of your offer.
- Don't assume that submitting the form will stop collection efforts; it does not automatically suspend collections.
- Don't submit incomplete forms or omit necessary documentation, as this can lead to rejection of your offer.
By following these guidelines, you can improve your chances of having your Offer in Compromise accepted. Make sure to review your application thoroughly before submission to avoid common pitfalls.
Misconceptions
Understanding the West Virginia CD-3 form can be challenging, and several misconceptions can lead to confusion. Below is a list of common misunderstandings regarding this form, along with clarifications to help clarify the process.
- Misconception 1: Submitting the CD-3 form guarantees that the offer will be accepted.
- Misconception 2: Once the offer is submitted, all collection efforts cease immediately.
- Misconception 3: Taxpayers can submit an offer for any amount they choose.
- Misconception 4: The CD-3 form can be filed without any supporting documentation.
- Misconception 5: Taxpayers can contest the tax liability after their offer is accepted.
- Misconception 6: All tax returns must be filed before submitting the offer.
- Misconception 7: The State will not retain any overpayments after the offer is submitted.
- Misconception 8: The CD-3 form can be submitted without a power of attorney if someone else is signing it.
- Misconception 9: Interest does not accrue on the offer amount until it is fully paid.
- Misconception 10: Once the offer is accepted, taxpayers are free from all tax obligations.
This is not true. The acceptance of an offer in compromise is not guaranteed. The State Tax Department evaluates each offer based on various factors, including the taxpayer's ability to pay.
While the submission may suspend some collection actions, it does not automatically halt all efforts. If the offer appears to be a delay tactic, the State may continue its collection activities.
The amount offered must be realistic and reflective of what the State can reasonably collect. A nominal or unreasonable offer may lead to rejection.
Supporting documents, including financial statements and a detailed explanation of the offer, are essential. Without them, the offer may be deemed incomplete.
Once an offer is accepted, taxpayers relinquish the right to contest the agreed-upon liability. This is an important consideration when submitting the offer.
While it is true that all tax returns should be filed, some exceptions may apply. However, compliance with future filing requirements is mandatory for five years after acceptance.
In fact, the State retains any overpayments or refunds until the offer is fully paid. This means taxpayers must be prepared for this condition when making an offer.
If someone other than the taxpayer signs the offer, a power of attorney must accompany the submission. This ensures that the individual is authorized to act on behalf of the taxpayer.
Interest at the legal rate begins to accrue from the date of acceptance of the offer until the full payment is made. This is an important aspect to consider when calculating the total liability.
This is misleading. Taxpayers must comply with all state tax laws for five years following acceptance. Non-compliance can lead to the reinstatement of the original liability.
Key takeaways
When filling out and using the West Virginia CD-3 form, keep these key takeaways in mind:
- Complete all required information: Make sure to provide your name, address, and taxpayer identification number at the top of the form. If applicable, include both names for joint liabilities.
- Detail your tax liabilities: Clearly list all taxes, periods, and amounts you wish to compromise in item (1) of the form.
- Propose a realistic offer: The total amount you offer must reflect what you can reasonably pay. Include initial and monthly payment amounts in item (2).
- Attach necessary documentation: Include Form 433-A or 433-B, along with any supporting documents that verify your financial situation and reasons for the compromise.
- Understand the implications: Accepting an offer means you cannot contest the liability amount and must comply with all future tax laws for five years.