(a) When an employer or any individual assessed under Section 1735 owes delinquent contributions, withholdings, penalty, or interest to the department, the director may enter into an agreement to accept partial payment in satisfaction of the full liability under the following conditions when he or she believes that it will be in the best interest of the state.

(1) Offers in compromise shall be considered only for liabilities of inactive out-of-business accounts, and of individuals assessed under Section 1735 or partners only if the individual assessed or partner no longer has a controlling interest or association with the business that incurred the liability to which the offer in compromise applies.

(2) The employer, individual assessed under Section 1735, or partner does not have access to current income sufficient to pay more than the accumulating interest and 6.7 percent of the liability on an annual basis.

(3) The employer, individual assessed under Section 1735, or partner does not have reasonable prospects of acquiring increased income or assets that would enable him or her to liquidate the liability in a reasonable period.

(4) The employer, individual assessed under Section 1735, or partner does not have assets, whether or not subjected to lien by the department, that if sold, would satisfy the liability.

(5) The amount offered in compromise is more than the department could reasonably expect to collect through involuntary means during the four-year period beginning on the date on which a compromise agreement is tendered by the employer, individual assessed under Section 1735, or partner.

(6) The compromise offer is submitted by the taxpayer in writing and is accompanied by cash, a cashier’s check, or money order equal to the amount offered in compromise.

(7) Only nondisputed, final tax liabilities shall be considered for compromise.

(8) Liabilities that arose as a result of fraud or actions that resulted in a conviction for a violation of this code shall not be compromised.

(b) When in the director’s judgment it serves the best interest of the state, the director may permit the agreed upon amount to be paid in installments under a payment agreement not to exceed five years in length.

(c) The employer or individual submitting an offer shall be notified in writing when an offer in compromise is accepted or rejected.

(1) Moneys paid to the department along with an offer shall not be applied against the liability by the department until the offer has been accepted or rejected.

(2) In the event an offer is rejected, the amount will either be applied to the liability or refunded, at the discretion of the employer or individual submitting the offer.

(Added by Stats. 1993, Ch. 356, Sec. 3. Effective January 1, 1994.)