Form 656 is a document used by the Internal Revenue Service (IRS) in the United States. It is known as the Offer in Compromise (OIC) application, and it is used by taxpayers to propose a settlement offer to the IRS in order to resolve their tax debt for a lesser amount than what they owe. The form requires detailed financial information and supporting documentation to determine the taxpayer's ability to pay and their eligibility for a reduced settlement.

Who is required to file form 656?

Form 656, known as the Offer in Compromise (OIC), is required to be filed by individuals or businesses who are seeking to settle their tax debts with the Internal Revenue Service (IRS) for an amount less than what is owed.

What is the purpose of form 656?

Form 656 is a document used by the Internal Revenue Service (IRS) in the United States. The purpose of Form 656 is to request an offer in compromise (OIC) from taxpayers who are unable to fully pay their tax debts. An OIC is a settlement option offered by the IRS, in which taxpayers can propose to pay a lesser amount than what they owe. This form helps taxpayers provide the required financial information, including their income, assets, and liabilities, to determine their eligibility for an OIC. The form also acts as the formal application for requesting a compromise on their tax debt.

What information must be reported on form 656?

Form 656, also known as the Offer in Compromise, is a form used by taxpayers to propose a settlement amount to the Internal Revenue Service (IRS) for their tax liabilities. The information that must be reported on Form 656 includes: 1. Taxpayer identifying information: This includes the taxpayer's name, address, Social Security number (or employer identification number), and contact information. 2. Type of tax liabilities: The taxpayer must indicate the type of tax liabilities they are seeking a settlement for, such as income tax, employment tax, or excise tax. 3. Tax periods involved: The taxpayer must specify the tax periods (years or quarters) for which they are proposing a settlement. 4. Payment terms: The taxpayer must provide details about the proposed payment terms, such as the amount they are offering, the method and timing of payment (lump sum or periodic payments), and any required down payment. 5. Financial information: The taxpayer must disclose their current financial situation, including income, expenses, assets, liabilities, and other sources of funds. 6. Reason for offer: The taxpayer must provide a detailed explanation of why they believe their offer represents the maximum amount the IRS can expect to collect within a reasonable period of time. 7. Supporting documentation: The taxpayer must attach supporting documentation to substantiate their financial information, such as bank statements, pay stubs, loan agreements, and other relevant documents. 8. Outstanding tax compliance: The taxpayer must certify that they are up to date with all their tax filings and have made the required estimated tax payments for the current year (if applicable). 9. Representing taxpayers: If the taxpayer is represented by a power of attorney or representative, their information and signature must also be included on the form. It is important to note that the completion of Form 656 is just one step in the offer in compromise process, and additional documentation may be required by the IRS during the evaluation and review of the offer.

What is the penalty for the late filing of form 656?

The penalty for the late filing of Form 656, which is the Offer in Compromise application, depends on the specific circumstances and the discretion of the Internal Revenue Service (IRS). Generally, if the form is filed late without a valid reason or reasonable cause, the IRS may reject the offer and continue with collection efforts. There may not be a specific monetary penalty associated with the late filing of Form 656, but it can have implications for the taxpayer's ability to resolve their tax debt through the offer in compromise program. It is recommended to consult with a tax professional or the IRS for specific guidance in your situation.

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The IRS will not file a Notice of Federal Tax Lien on any individual shared Correction Agreement p I authorize IRS to correct any typographical or clerical errors or make minor modifications to my/our Form 656 that I signed in connection to this offer. Catalog Number 16728N www.irs.gov. Make sure to sign and date the Form 656 Rev. 3-2017 Page 2 of 6 Low-Income Certification Individuals and Sole Proprietors Only Do you qualify for Low-Income Certification You qualify if your gross monthly...

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How to fill out form 656 2020

How to fill out form 656:

01

Obtain a copy of form 656 from the appropriate government agency or website.

02

Carefully read and review the instructions provided with the form to ensure a thorough understanding of the requirements.

03

Gather all necessary information and documentation required for the form, such as personal identification details, financial records, and any relevant supporting evidence.

04

Take your time to accurately complete each section of the form, providing clear, concise, and truthful information.

05

Double-check your responses for any errors or omissions before submitting the form.

06

If applicable, sign and date the form as required.

07

Include any required additional documentation requested by the form instructions.

08

Submit the completed form and any accompanying documentation to the appropriate government agency, following their specified submission process.

Who needs form 656:

01

Individuals or businesses seeking to enter into an offer in compromise (OIC) with the Internal Revenue Service (IRS) in the United States may need to fill out form 656.

02

The OIC program allows eligible taxpayers to settle their tax liabilities for less than the full amount owed, based on their financial circumstances and ability to pay.

03

Therefore, individuals or businesses facing significant tax debts and unable to fulfill their obligations may benefit from submitting form 656 to request an OIC.

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Comments and Help with form 656 2020

Video instructions and help with filling out and completing form 656

Instructions and Help about low income certification guidelines form 656

Hi and welcome to another IRS Forms video Today were tackling IRS Form 656 Offering Compromise This is a form that you definitely want Roget right the first time Any mistake you make can cause a whole host of problems for your client including delaying their offer in compromise by months So lets take a look at a few tips that can help you make sure your Form 656 is absolutely perfect the first time If you think this video is helpful make surety hit that like button and subscribe to the channel Tip 1 What is IRS Form 656 and Who Should It Form 656 is one of the forms required by theirs for requesting an offer in compromise or OIC This form in combination with Form 433-OICFallows the IRS to evaluate your clients financial situation and their tax debt to determine if they will accept the offer Form 656 is where you report the details of your proposed OIC Those details include vital information such as the offer amount and the proposed payment timeline It's also where you make your case for whits in the IRS's the best interest to accept less money than the taxpayer owes This form is for any client business orindividualwho is requesting either a Doubt as to Convertibility or Effective Tax Administration OIC If you are submitting a Doubt as to Liability offer in compromise then you'll use the form 656-L instead of the standard 656 Tip 2 Is Doubt as to Convertibility or Effective Administration Better for Your Client Section three asks you to designate the reason for the offer Doubt as to Convertibility or Effective Tax Administration As stated in the IRM doubt as to collectibilityexists in any case where the taxpayers assets and income are less than the full amount of the assessed liability In other words a Doubt as to CollectibilityOIC is for clients who don't have enough disposable income and assets to pay their tax debt The evidence for this type of offer in compromises collected largely through Form 433-OIC along with supporting documentation such as bank and credit card statements If your client simply can't afford to pay their tax debt Doubt as to Convertibility is the best offer for them Effective Tax Administration on the other hand is for clients who can technically afford to pay their tax debt but doing so would cause undue harm to the taxpayer or undermine public faith in IRS Basically you have to convince the IRS that in this case not collecting the tax is more beneficial to the agency than collecting the tax The IRS isn't going to seize the assets of a 90-year-old woman living on social security or force a disabled man to sell the home he has specially equipped to accommodate his disability For more examples of Effective Tax Administration cases check out the links in the description Tip 3 How Do You Determine Payment Terms Section four prompts you to choose between two different payment options lump sum and periodic payment A lump sum offer is for clients who can afford to pay their offer amount in 5 months or less When submitting a lump...

FAQ

What is form 656?

Form 656 is a document used by the Internal Revenue Service (IRS) in the United States. It is known as the Offer in Compromise (OIC) application, and it is used by taxpayers to propose a settlement offer to the IRS in order to resolve their tax debt for a lesser amount than what they owe. The form requires detailed financial information and supporting documentation to determine the taxpayer's ability to pay and their eligibility for a reduced settlement.
Who is required to file form 656?

Form 656, known as the Offer in Compromise (OIC), is required to be filed by individuals or businesses who are seeking to settle their tax debts with the Internal Revenue Service (IRS) for an amount less than what is owed.
How to fill out form 656?

Form 656, also known as the Offer in Compromise (OIC) application, is a document used by taxpayers to propose settling their tax debt with the IRS for less than the full amount owed. Here's a step-by-step guide on how to fill out form 656: 1. Section 1: Personal Information Provide your personal details such as your name, Social Security Number (SSN), address, and contact information. 2. Section 2: Offer Details Enter the tax period(s) and type(s) of tax debt you wish to settle. Indicate the total amount of tax owed including penalties and interest. 3. Section 3: Tax Compliance Declare if you are in bankruptcy or not, as well as if you have filed all required tax returns. If you haven't filed all returns, you must submit them before the application can be processed. 4. Section 4: Financial Information Provide detailed information about your income, assets, and expenses. This section requires you to disclose your monthly income from all sources, including wages, investment earnings, and government benefits. List your assets, such as property, vehicles, and bank accounts, along with their current market values. You'll also have to outline your living expenses, including housing, utilities, transportation, and other necessary expenses. 5. Section 5: Lump Sum Cash Offer If you are proposing a lump sum payment, complete this section by entering the amount you are offering to pay. The IRS may offer a discount for paying in a lump sum. 6. Section 6: Periodic Payment Offer If you are proposing a periodic payment plan, state the amount you will offer per month, along with the frequency of payments (e.g., monthly, quarterly). Provide details about when your proposed periodic payments would begin. 7. Section 7: Additional Information Include any additional information or explanations regarding your financial situation that may be relevant to your offer. 8. Section 8: Declaration Carefully read the declaration statement and sign and date the form. 9. Section 9: Signatures If you have a tax practitioner representing you, they need to fill in their information and sign the form. Alternatively, if you are filing on behalf of a business, the authorized person should sign. 10. Section 10: Mailing Instructions Follow the specific instructions to mail your completed form. Typically, it must be sent to the appropriate IRS office mentioned in the instructions. Remember to attach all required supporting documentation, such as bank statements, pay stubs, and proof of expenses, as well as the application fee (unless you qualify for a waiver). It's also recommended to consult a tax professional for guidance throughout the process.
What is the purpose of form 656?

Form 656 is a document used by the Internal Revenue Service (IRS) in the United States. The purpose of Form 656 is to request an offer in compromise (OIC) from taxpayers who are unable to fully pay their tax debts. An OIC is a settlement option offered by the IRS, in which taxpayers can propose to pay a lesser amount than what they owe. This form helps taxpayers provide the required financial information, including their income, assets, and liabilities, to determine their eligibility for an OIC. The form also acts as the formal application for requesting a compromise on their tax debt.
What information must be reported on form 656?

Form 656, also known as the Offer in Compromise, is a form used by taxpayers to propose a settlement amount to the Internal Revenue Service (IRS) for their tax liabilities. The information that must be reported on Form 656 includes: 1. Taxpayer identifying information: This includes the taxpayer's name, address, Social Security number (or employer identification number), and contact information. 2. Type of tax liabilities: The taxpayer must indicate the type of tax liabilities they are seeking a settlement for, such as income tax, employment tax, or excise tax. 3. Tax periods involved: The taxpayer must specify the tax periods (years or quarters) for which they are proposing a settlement. 4. Payment terms: The taxpayer must provide details about the proposed payment terms, such as the amount they are offering, the method and timing of payment (lump sum or periodic payments), and any required down payment. 5. Financial information: The taxpayer must disclose their current financial situation, including income, expenses, assets, liabilities, and other sources of funds. 6. Reason for offer: The taxpayer must provide a detailed explanation of why they believe their offer represents the maximum amount the IRS can expect to collect within a reasonable period of time. 7. Supporting documentation: The taxpayer must attach supporting documentation to substantiate their financial information, such as bank statements, pay stubs, loan agreements, and other relevant documents. 8. Outstanding tax compliance: The taxpayer must certify that they are up to date with all their tax filings and have made the required estimated tax payments for the current year (if applicable). 9. Representing taxpayers: If the taxpayer is represented by a power of attorney or representative, their information and signature must also be included on the form. It is important to note that the completion of Form 656 is just one step in the offer in compromise process, and additional documentation may be required by the IRS during the evaluation and review of the offer.
What is the penalty for the late filing of form 656?

The penalty for the late filing of Form 656, which is the Offer in Compromise application, depends on the specific circumstances and the discretion of the Internal Revenue Service (IRS). Generally, if the form is filed late without a valid reason or reasonable cause, the IRS may reject the offer and continue with collection efforts. There may not be a specific monetary penalty associated with the late filing of Form 656, but it can have implications for the taxpayer's ability to resolve their tax debt through the offer in compromise program. It is recommended to consult with a tax professional or the IRS for specific guidance in your situation.
How can I edit form 656 from Google Drive?

People who need to keep track of documents and fill out forms quickly can connect PDF Filler to their Google Docs account. This means that they can make, edit, and sign documents right from their Google Drive. Make your irs form 656 into a fillable form that you can manage and sign from any internet-connected device with this add-on.
Can I create an electronic signature for the 656 in Chrome?

Yes. By adding the solution to your Chrome browser, you may use pdfFiller to eSign documents while also enjoying all of the PDF editor's capabilities in one spot. Create a legally enforceable eSignature by sketching, typing, or uploading a photo of your handwritten signature using the extension. Whatever option you select, you'll be able to eSign your form 656 irs in seconds.
How do I complete form 656 application on an Android device?

Complete form f656 and other documents on your Android device with the pdfFiller app. The software allows you to modify information, eSign, annotate, and share files. You may view your papers from anywhere with an internet connection.

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IRS 656 2023	4.8 Satisfied (87 Votes)
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IRS 656 2018	4.1 Satisfied (40 Votes)
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IRS 656 2016	4.4 Satisfied (815 Votes)
IRS 656 2015	4.4 Satisfied (321 Votes)
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