Last updated on Feb 12, 2015
Get the free IRS Form 656 Offer in Compromise
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What is IRS Form 656
The IRS Form 656 Offer in Compromise is a tax document used by U.S. taxpayers to settle tax debt for less than the full amount owed.
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Who needs IRS Form 656?
Explore how professionals across industries use pdfFiller.
IRS Form 656 is needed by:
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Taxpayers struggling with tax debt
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Individuals seeking tax relief options
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Those unable to pay their full tax obligation
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People eligible for financial hardship programs
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Tax professionals assisting clients with debt resolution
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Individuals exploring IRS payment plans
Comprehensive Guide to IRS Form 656
What is IRS Form 656 Offer in Compromise?
IRS Form 656 is a crucial tax document designed to help taxpayers who are facing challenges in settling their tax debts. This form allows taxpayers to submit an Offer in Compromise (OIC), which proposes settling their tax liability for less than the full amount owed.
The Offer in Compromise is a significant option for individuals who cannot pay their entire tax debt. This process requires taxpayers to provide detailed financial information to the IRS, ensuring all aspects of their financial situation are transparent and accurately represented.
Purpose and Benefits of the IRS Form 656 Offer in Compromise
The primary benefit of IRS Form 656 is its ability to help taxpayers substantially reduce their overall tax debt. By utilizing this form, taxpayers can negotiate for a settlement that alleviates some of their financial burdens.
When considering this option, taxpayers have two potential payment choices: a lump sum payment or a series of periodic payments. This flexibility is advantageous for those experiencing financial hardship, providing necessary tax relief.
Eligibility Criteria for the IRS Form 656 Offer in Compromise
To apply for an Offer in Compromise using IRS Form 656, taxpayers must meet specific eligibility requirements. These criteria often include demonstrating financial hardship and having an income level below a certain threshold.
Applicants should be aware that several factors could disqualify them from being eligible, including previous compliance issues or an outstanding tax obligation. It is also important to gather supporting documentation that validates the claims made in the application.
How to Fill Out the IRS Form 656 Offer in Compromise Online
Filling out IRS Form 656 online can be streamlined by following these steps:
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Access the online platform where you can fill out the form.
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Complete essential fields required for processing the application.
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Make sure to input accurate financial information as required.
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Review the completed form for errors or missing information.
Additionally, being aware of common pitfalls can help taxpayers ensure that their application is submitted correctly and efficiently.
Required Documents and Supporting Materials for IRS Form 656
When submitting IRS Form 656, it is crucial to provide a comprehensive set of financial documents. Required materials often include:
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Income statements that demonstrate current financial status.
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Records of monthly expenses to provide context regarding financial hardship.
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Any additional supporting materials that enhance your application’s credibility.
Accurate documentation plays a significant role in determining the success of the submission to the IRS.
Submission Methods for the IRS Form 656 Offer in Compromise
Taxpayers have several options for submitting IRS Form 656 along with their required documentation. Acceptable methods include:
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Mailing the completed form to the designated IRS address.
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Submitting the form online via services like pdfFiller.
Be mindful of any associated fees, such as the application fee, and understand the important deadlines and expected processing times for your submission.
What Happens After You Submit IRS Form 656?
Once IRS Form 656 is submitted, taxpayers can expect a few key processes. Initially, a confirmation of receipt will be provided, allowing you to track the status of your submission. It is advisable to keep records of this confirmation for future reference.
The IRS will review the application, often requiring several weeks for a decision. It’s also critical to understand common reasons for rejection, such as insufficient documentation or failure to meet eligibility criteria, and be prepared to address these issues swiftly if they arise.
Using pdfFiller to Complete IRS Form 656 Offer in Compromise
pdfFiller stands out as a valuable tool for taxpayers filling out IRS Form 656. This platform offers a range of capabilities such as:
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The ability to edit and save documents easily.
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Options for eSigning directly within the application.
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A convenient interface for sharing completed forms.
Additionally, pdfFiller employs robust security measures to ensure that sensitive tax documents are handled safely and confidentially.
Privacy and Security When Handling IRS Form 656 Offer in Compromise
Taxpayers need to be confident that their personal information is secure when submitting IRS Form 656. pdfFiller emphasizes the following security features:
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Utilization of 256-bit encryption to protect sensitive data.
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Compliance with SOC 2 Type II, HIPAA, and GDPR regulations.
Data protection is prioritized throughout the submission process, giving users peace of mind when handling their forms online.
Sample or Example of a Completed IRS Form 656 Offer in Compromise
Seeing a completed IRS Form 656 can provide clarity for applicants. A sample form typically showcases:
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What filled-out sections should look like for proper guidance.
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Key fields that require attention when completing the form.
Utilizing an example can significantly enhance the accuracy of submissions, ensuring that all necessary information is included and correctly formatted.
How to fill out the IRS Form 656
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1.Access the IRS Form 656 Offer in Compromise by visiting pdfFiller and searching for the form in the document library.
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2.Open the form to view the required fields and any accompanying instructions. Familiarize yourself with the layout and sections.
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3.Before you begin filling in the form, gather necessary financial documents, such as income statements, bank statements, and a list of your expenses.
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4.Start by entering your personal information in the designated areas, including your name, address, and Social Security number.
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5.Next, provide detailed financial information as requested on the form. Ensure accuracy and completeness in your responses.
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6.Make sure to follow the guidelines and instructions for each section carefully, using the available editing tools on pdfFiller.
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7.Once you have completed all sections, review the form thoroughly to check for errors or missing information.
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8.Utilize pdfFiller's tools to validate your entries against common mistakes, ensuring compliance with IRS requirements.
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9.After final review, you can save your work on pdfFiller or download a copy in your desired format. Consider submitting electronically for faster processing.
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10.If submitting by mail, ensure you send to the correct IRS address detailed in the form instructions for timely processing.
Who is eligible to apply for the IRS Form 656 Offer in Compromise?
Eligible applicants include taxpayers who cannot pay their full tax debt due to financial hardship. They must meet specific criteria outlined by the IRS and demonstrate their inability to pay.
What is the application fee for IRS Form 656?
The application fee for the IRS Form 656 Offer in Compromise varies, typically around $186. This fee must be included with your submission and can be waived in certain situations based on income.
How should I submit the completed IRS Form 656?
You can submit the completed IRS Form 656 Offer in Compromise either electronically via the IRS website or by mail. If mailing, be sure to send it to the address indicated in the form instructions.
What supporting documents are required with the form?
When submitting IRS Form 656, you must provide detailed financial information, including income statements, expense records, and any documentation that supports your claim of financial hardship.
How long does it take to process the IRS Form 656?
Processing IRS Form 656 Offer in Compromise can take several months. Typically, you can expect to receive a response from the IRS within 6 to 12 months, depending on their workload.
What are common mistakes to avoid on IRS Form 656?
Common mistakes include failing to provide accurate financial information, omitting required documentation, or leaving sections blank. Carefully review the form before submission to avoid delays.
Can I make changes to my IRS Form 656 after submitting it?
Once submitted, changes cannot be made directly to your IRS Form 656. If significant changes are needed, you may need to withdraw your application and submit a new one.
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