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Form Department of the Treasury Internal Revenue Service 656 Offer in Compromise (March 2009) Attach Application Fee and Payment (check or money order) here. Section I IRS RECEIVED DATE Taxpayer Contact

How to fill out offer in compromise

How to Fill Out Offer in Compromise:

1. Gather all necessary documents: Before starting the process, make sure you have all the required documentation. This will typically include financial statements, tax returns, and any supporting documents that showcase your financial situation accurately.
2. Complete Form 656: The Offer in Compromise (OIC) application requires Form 656. Fill out the form accurately, providing all requested information about your identity, tax liabilities, and proposed offer amount.
3. Include payment of application fee: Along with your OIC application, you are required to submit a non-refundable application fee. Ensure that the payment is included with your application, as it will delay the process otherwise.
4. Evaluate your financial ability: The next step is to determine your ability to pay the compromised amount. This involves assessing your assets, income, and expenses. It is essential to provide honest and complete information during this evaluation.
5. Submit supporting documentation: To support your claim of financial hardship, you need to submit various supporting documents. These may include bank statements, proof of income, expense records, and any additional evidence that demonstrates your inability to pay the full tax debt.
6. Create a reasonable offer amount: Based on your financial evaluation, you must calculate a reasonable offer amount. This amount should represent the maximum you can realistically pay toward your tax debt.
7. Compile a thorough explanation: It is crucial to include a detailed explanation as to why you are requesting an offer in compromise. This explanation should highlight your financial hardships, changes in circumstances, or other factors that justify your inability to pay the full tax debt.

Who Needs an Offer in Compromise:

1. Taxpayers with significant tax debt: An offer in compromise is typically sought by individuals or businesses with outstanding tax debt. If you owe a substantial amount of money to the IRS and genuinely cannot pay it in full, you may qualify for an offer in compromise.
2. Taxpayers with financial hardship: Those facing financial hardships such as loss of employment, severe medical expenses, or other life-altering events may be eligible for an offer in compromise. The IRS takes into account the taxpayer's ability to pay when considering the compromise.
3. Taxpayers with doubt of liability: If you have a genuine dispute regarding the amount of tax debt owed, you may be able to qualify for an offer in compromise based on doubt of liability. This requires presenting valid arguments or evidence to the IRS that calls into question the amount of debt owed.

Please note that the process and eligibility criteria for an offer in compromise can be complex. It is advisable to seek professional help from a tax attorney or enrolled agent to ensure you complete the application accurately and increase your chances of approval.

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What is offer in compromise?

Offer in compromise is a program that allows taxpayers to settle their tax debt for less than the full amount owed.

Who is required to file offer in compromise?

Taxpayers who are unable to pay their full tax liability or have a valid reason for not paying the full amount owed.

How to fill out offer in compromise?

Taxpayers can fill out Form 656, Offer in Compromise, and submit it along with the required documentation to the IRS.

What is the purpose of offer in compromise?

The purpose of offer in compromise is to help taxpayers resolve their tax debt and avoid more serious consequences such as wage garnishment or bank levies.

What information must be reported on offer in compromise?

Taxpayers must report their financial information, including income, expenses, assets, and liabilities, on the offer in compromise form.