Complete one Form 656 for your individual tax debts and one Form 656 for your business tax debts. Each Form 656 will require the 186 application fee and initial payment. Do not send original documents. Fill out Form 656. The Form 656 identifies the tax years and type of tax you would like to compromise. The Form 656-L is not included as part of this package. To request a Form 656-L visit www. irs. gov or a local IRS office or call toll-free 1-800-TAX-FORM 1-800-829-3676. One Form 656 will be...
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Who needs an IRS 656 form?

This form is an Offer in Compromise, the agreement concluded between the taxpayer and the IRS to reduce the amount of the tax debt. If your Offer is approved by the IRS, you will pay your debt according to a specific program.

What is the purpose of the IRS 656 form?

This form gives the IRS important information about your financial situation. If the IRS officials determine that you are not able to pay your taxes, they will make a plan for paying off the debts.

What documents must accompany the IRS 656 form?

The Offer in Compromise must be filed together with the completed form 433-A or form 433-B, and all the required copies of the documents listed at the end of each form. The applicant also must pay the application fee and attach a check to the offer (you don’t have to pay the fee if you are eligible for a low-income certification).

When is the IRS 656 form due?

This form must be sent after you file all the required tax returns for the current tax year, make all the required tax payments or make all the required federal tax deposits.

What information should be provided in the IRS form 656?

The taxpayer will add the following information:

  • Personal information and business information

  • Information about tax periods

  • Reasons for offer

  • Low-income certification

  • Payment terms

  • Designation of down payment and deposit

  • Source of funds

  • Offer terms

The form must be signed and dated by the taxpayer as well.

The forms 433-A and B, as part of the Offer in compromise, should also be completed by the taxpayer. These forms ask for the following information:

  • Personal and business information

  • Employment information for wage earners or businesses

  • Information about personal and business asset

  • Information about business asset and expense

  • Information about monthly household (business) income and expense

  • Minimum offer amount

What do I do with the form after its completion?

All parts of the Offer in Compromise are forwarded to the appropriate IRS facility.

Hi my name is Dave jackal I'm a tax attorney and I'll be your host for this short video on the IRS offer and compromise program first thing we'll look at here is what is an offer and compromise and then we'll take a quick look at what is not offer and compromise is an IRS program that is designed to allow tax payers to reduce their tax debt to a payable amount so if you owe more taxes than you can legitimately pay the offer and compromise program is for you the offer and compromise program is not a solution to every tax problem or everyone with tax debt contrary to what you may see online or a year on TV or on the radio it's not a way for everyone to settle their tax debt for pennies on the dollar assuming that you're in a situation where you owe more taxes than you can pay the next question is is an offer and compromise right for me and the answer is may be an offer and compromise is not the solution for everyone even if you owe more taxes than you can pay there's other issues and options to consider and there's other ways of you know eliminating tax debt that might be better than an offer and compromise for instance the statute of limitations may run out and the IRS won't be able to collect you might be able to discharge the tax in bankruptcy you might be able to get innocent spouse relief get penalties abated and so on there are three types of offers and compromise these are I call them you can't pay you don't owe in special circumstances the can't pay type of offer and compromise is the most common and is formally known as doubt as the collectability the don't owe is a basis and is formally known as doubt is the liability and the special circumstances is formally known as to provoke effective tax administration you can file under any one or all three of these types offers and compromise at the same time so what are the steps in the offer and compromise process well you'll need to complete IRS form six five six that's where you actually make an offer to settle you will come up with a number where you say this is what I am offering the settle also in conjunction with this form you can submit legal arguments for the reduction of your debt and that would be legal basis if you're filing as a doubt as to liability or a dono claim you can file some legal arguments there you can raise issues such as the non collectability of the debt because you may be able to file for a bankruptcy so the IRS ought to accept your offer because otherwise you go to bankruptcy and pay them nothing statute of limitations is coming up those types of things you also have to provide extensive financial data and that will be unformed 433 and on that form you'll actually end up calculating what the value of your assets is and how much you'll be able to pay on a monthly basis going forward and those numbers will be combined and that'll be the basis for the number that you would provide as your settlement offer so the process is more of a formula it's not just hey free...

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Please select a version for Fillable IRS 656-B form
  • 2018 IRS 656-B Fillable
  • 2017 IRS 656-B Fillable
  • 2016 IRS 656-B Fillable
  • 2015 IRS 656-B Fillable
  • 2014 IRS 656-B Fillable
  • More...