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 taxpayers in the US to settle their tax debt for less than the full amount owed.
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Who needs IRS Form 656?
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IRS Form 656 is needed by:
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Individuals seeking to reduce their tax debt
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Taxpayers facing financial hardships
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Those unsure if they can pay their owed taxes
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Tax professionals assisting clients with tax issues
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Entities pursuing tax debt relief options
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Low-income earners with significant tax liabilities
Comprehensive Guide to IRS Form 656
What is the IRS Form 656 Offer in Compromise?
The IRS Form 656 is a critical tax document that allows taxpayers to negotiate their tax debt through an Offer in Compromise. This form is essential for anyone looking to settle their tax debts for less than the total amount owed. The Offer in Compromise process enables taxpayers to put forth a proposal to the IRS, which includes detailed financial information that reflects their current financial situation. Accurate reporting of financial conditions is vital, as it may significantly influence the IRS's decision in evaluating the offer.
When submitting the IRS Form 656, taxpayers must ensure that all information regarding their assets, income, and liabilities is reported truthfully. Failure to do so could jeopardize the application and result in denial.
Purpose and Benefits of the IRS Form 656 Offer in Compromise
The main purpose of the IRS Form 656 is to provide taxpayers with a pathway to relieve the burden of tax debt. One of the prominent advantages of using this form is the potential to settle a tax debt for less than what is owed, providing much-needed relief. Additionally, utilizing this form can alleviate financial strain, allowing individuals to regain control of their economic situation.
While the IRS evaluates an Offer in Compromise, taxpayers are given legal protection from collection actions. This can prevent unwanted seizures of assets or wages, thereby preserving their ability to manage their financial commitments in a more sustainable manner.
Eligibility Criteria for the IRS Form 656 Offer in Compromise
Not everyone is eligible to submit the IRS Form 656. To qualify, applicants must meet specific income and asset thresholds that the IRS establishes. These standards ensure that only those in genuine financial hardship can use this option. Special circumstances, such as significant medical expenses or prolonged economic hardship, may also impact eligibility.
Previous tax compliance is another important consideration, as taxpayers must demonstrate that they have filed all required tax returns and made estimated payments where necessary. Understanding these eligibility criteria is crucial for taxpayers seeking relief through an Offer in Compromise.
Information You'll Need to Gather Before Filing IRS Form 656
Before completing the IRS Form 656, taxpayers should gather a comprehensive set of financial documents to support their application. Key documents include:
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Proof of income (pay stubs, bank statements)
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Monthly expense statements
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List of current debts and liabilities
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Inventory of assets
Providing complete and accurate information is essential, as the IRS relies on this documentation to assess the offer accurately. Specific fields within the form require detailed input to avoid unnecessary delays or potential rejections.
How to Fill Out the IRS Form 656 Offer in Compromise Online
Filling out the IRS Form 656 digitally can simplify the application process. To begin, access the form through pdfFiller, where users can conveniently complete the application online. The platform offers a user-friendly interface that breaks down the form field by field, ensuring clarity on what information to provide.
Before submitting, users should conduct validation checks to confirm that all information is accurate. This attention to detail minimizes the risk of errors and increases the likelihood of acceptance.
Submission Methods and Where to Submit the IRS Form 656
Once the IRS Form 656 is completed, taxpayers have several options for submission. They can submit the form either online via pdfFiller or through traditional mail. It is crucial to reference the appropriate submission addresses based on geographic location to ensure timely processing.
Maintaining proof of submission is also important, as it serves as a record for taxpayers in case follow-up is needed regarding their offer.
What Happens After You Submit Your IRS Form 656 Offer in Compromise?
After submission, the IRS will begin evaluating the Offer in Compromise. Taxpayers can expect a timeline for evaluation, during which the IRS will review the submitted information thoroughly. The potential outcomes include acceptance of the offer, rejection, or a request for additional information to clarify financial details.
In the event of a rejection, taxpayers have the option to appeal the decision, making it crucial to understand the next steps based on the IRS's response.
Common Errors and How to Avoid Them When Filing IRS Form 656
Filling out the IRS Form 656 can be straightforward, but many taxpayers make common errors that could hinder their applications. Common mistakes include being incomplete in providing information and making miscalculations regarding financial figures. To prevent these pitfalls, consider implementing the following strategies:
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Review the form thoroughly before submission
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Utilize available resources for guidance
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Consult customer support if needed
By proactively addressing potential errors, applicants can enhance the accuracy of their submissions and increase their chances for success.
Security and Compliance When Submitting IRS Form 656
When submitting the IRS Form 656, maintaining privacy and security is paramount. pdfFiller employs advanced security measures, such as 256-bit encryption, to safeguard sensitive information during the filing process. Taxpayers should prioritize the protection of their financial data while submitting their application.
Best practices for managing financial documents securely include regular updates of passwords and safe storage solutions. Awareness of privacy measures is essential in safeguarding personal information effectively.
How pdfFiller Helps You Complete IRS Form 656 Offer in Compromise
pdfFiller streamlines the process of completing the IRS Form 656 by offering a suite of features designed to support taxpayers. With tools for editing, signing, and submitting forms, pdfFiller enhances users' experience in dealing with tax forms.
Key features, such as templates and the option for electronic signatures, provide added convenience. Using pdfFiller allows taxpayers to navigate the complexities of the IRS Form 656 with greater ease, ensuring a stress-free filing experience.
How to fill out the IRS Form 656
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1.Begin by accessing pdfFiller and searching for 'IRS Form 656 Offer in Compromise'. Once located, click on the form to open it in the editor.
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2.Familiarize yourself with pdfFiller's interface. Use the toolbars to navigate through the form fields, ensuring you understand each section before entering information.
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3.Gather the necessary financial documents such as previous tax returns, proof of income, and details of your current assets and expenses. Have this information ready as you will need it for filling the form accurately.
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4.In each section of the form, enter your financial information carefully. Double-check entries for accuracy, especially in calculating your income, expenses, and proposed payment options.
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5.After completing all fields, review the filled form thoroughly. Ensure all required information is provided and that calculations are correct.
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6.Once satisfied with your entries, you can save your work. Use the 'Save' option to store your filled-out form or download it for your records.
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7.To submit the form, follow the instructions provided by the IRS regarding where to send your completed Form 656. If applicable, use pdfFiller’s submission options to send directly or print your form for mailing.
Who is eligible to submit IRS Form 656?
Eligibility for IRS Form 656 includes any taxpayer who has outstanding tax debts and cannot afford to pay them in full. You must demonstrate financial hardship and be compliant with filing requirements.
What documents must accompany IRS Form 656?
When submitting Form 656, tax debtors often need to include financial statements that detail income, expenses, assets, and any other relevant information to support their case for an Offer in Compromise.
How long does it take to process an Offer in Compromise?
The IRS typically processes Form 656 in about 6 to 9 months, but processing times may vary based on the complexity of your situation and the volume of applications the IRS receives.
What payment options are available when submitting IRS Form 656?
Form 656 allows taxpayers to choose from three payment options: a lump sum cash payment, periodic payment, or a combination of both. Carefully evaluate your financial situation to select the best option.
Are there any fees associated with submitting Form 656?
Yes, there is a non-refundable application fee that must be included with Form 656. However, fee waivers may be available for low-income applicants under certain conditions.
What are common mistakes to avoid when filling out Form 656?
Common mistakes include incomplete sections, inaccurate financial information, and not providing documentation as required. Always double-check your entries and ensure all instructions are followed carefully.
Can I revise my offer after submitting Form 656?
Yes, you can revise your offer after submission if your financial situation changes. It’s important to communicate any changes to the IRS promptly.
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