TAX DEBT RELIEF OPTIONS – District of Columbia Office of Tax and Revenue

M&M Financial has been successfully resolving back tax liabilities for small businesses and individuals nationwide since 2005.  We deal with the IRS and State taxing authorities, so you do not have to!  

Washington DC provides some helpful information to get you started resolving your tax debt on its website.

Washington DC Taxpayer Rights
Washington DC Collection Division
Washington DC Collection Information
Washington DC Collection Issues

Below is some information that will help you start resolving your state tax liabilities.  If you have questions and would like to talk to a licensed Tax Resolution Specialist please do not hesitate to call us at 866-487-5624.


Here is a summary of the payment plan guidelines to satisfy your personal or business tax liability with the Washington DC Office of Tax and Revenue (OTR):
  • 24 for month payment plans can be granted without submitting financial information, if you owe less than $5,000 in back-taxes and can pay the balance within 2 years. 
  • If you owe more than $5,000 in back-taxes, or need longer than 2 years to pay the tax liability, extended term payment plans may be granted, but you will need to submit your Personal Financial Statement and/or Business Financial Statement for review.  
Quick Tip:  Be careful when submitting your financial statements to the Washington DC Office of Tax and Revenue.  It’s easy to overstate your income and understate your expenses which can lead to unaffordable payment terms.

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Offer in Compromise

DC OTR does have an Offer in Compromise (OIC) program to allow you to settle your tax liability for a lesser amount.  We do not recommend the OIC for operating businesses.  Here are the basics of submitting an OIC to DC OTR: 
  • 20% nonrefundable down payment of your total offer amount will be required. 
  • OTR states that the expected review time of your OIC is 90 days.  It could take longer.
  • Must start making monthly payments towards your settlement amount when you submit your OIC, if you don’t pay Offered amount in full. 
  • If your Offer is accepted, it may be paid within 12 months of the Offer acceptance date. 
  • If your OIC is denied, all payments made while your Offer is under review are nonrefundable and will be applied to tax your tax liability. 
  • 100% tax compliance is required for 5 years after the date of your OIC being accepted.  Otherwise, your OIC will be defaulted, your total tax debt will be reinstated with accrued penalty and interest, and collections will proceed.  
  • Will be required to submit Personal Financial Statement and/or Business Financial Statement.  OTR will accept the IRS Collection Information Statements 433-A and 433-B Forms in place of the PA-1 an PA-2 forms, if they have been prepared within the last 6 months. 
Quick Tip:  The Offer in Compromise is a popular program that most delinquent taxpayers are interested in, but very few qualify for.  Consult with a tax professional before submitting your OIC.  It may save you a lot of future frustration.

Penalty Relief

Penalty relief is available for Washington DC personal tax liabilities but is not a realistic option for most business tax debts associated with Sales Tax or Unemployment Tax.  

To be eligible for penalty relief you need to show to the OTR that you’ve experience an unavoidable hardship that fits within Reasonable Cause criteria.  Similar to the IRS, Reasonable Cause is very broadly defined by the OTR.  You need to submit a Penalty Waiver Request in writing with supporting documentation that proves you experienced a hardship caused by an “uncontrollable outside event” and that you exercised ordinary business care and prudence in meeting your tax obligations.   

page last reviewed 01/04/2024

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