IRS 656-L Explained
What is IRS 656-L?
The IRS 656-L is a tax form used to submit an offer in compromise (OIC) for taxpayers who believe they cannot pay their tax debt in full. This form allows individuals and businesses to request a settlement with the IRS for less than the total amount owed. It is specifically designed for lower-income individuals who may qualify for a reduced tax obligation.
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Purpose of IRS 656-L
The primary purpose of IRS 656-L is to help taxpayers settle their debts with the IRS in an amicable manner. This form allows taxpayers to propose a compromise on their tax debts based on their current financial situation. The IRS evaluates these offers based on a variety of factors, including the taxpayer's ability to pay, income, and expenses. By using this form, individuals and businesses can potentially reduce their tax liabilities.
Where is IRS 656-L used and by whom?
The IRS 656-L is utilized primarily by individuals and small businesses facing financial difficulties. Here are some typical user groups and scenarios:
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1.Individuals with low income who have accrued tax debts they cannot settle.
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2.Self-employed individuals struggling with cash flow issues due to unexpected circumstances.
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3.Small businesses that are unable to pay back payroll taxes.
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4.Taxpayers who have experienced significant life changes, such as divorce or loss of a job, impacting their finances.
Step-by-step: how to fill out IRS 656-L
Filling out IRS 656-L involves several sections, each requiring specific information. Here’s how to complete the form step-by-step:
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1.Begin by entering your name, Social Security number, and the name of your business, if applicable.
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2.Specify the tax form type you are addressing (e.g., income tax, payroll tax).
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3.Provide detailed information about your income and expenses. List all sources of income and details about your monthly expenses, such as housing, utilities, and food.
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4.Calculate your offer amount, which should reflect what you can afford to pay while still meeting your necessary living expenses.
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5.Sign and date the form. Ensure you provide any additional documentation required to support your offer.
For added convenience, users can easily complete IRS 656-L using pdfFiller, which allows for seamless editing and electronic signing of the document.
Who is required to complete IRS 656-L?
The IRS 656-L must be completed by individuals or businesses who wish to propose a compromise on their owed tax debt. This includes:
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1.Taxpayers whose financial situation prevents them from settling their debts in full.
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2.Individuals or businesses under financial hardship that can provide documented evidence.
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3.Those who are unable to establish a reasonable installment plan due to their financial condition.
Filing this form doesn’t guarantee a compromise will be accepted, but it is necessary for anyone seeking this option.
Information you need to complete IRS 656-L
To complete IRS 656-L successfully, gather the following information:
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1.Name and Social Security number or Employer Identification Number.
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2.Details about the tax liability, including the type of tax owed and the years affected.
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3.Financial information, including income from all sources and monthly expenses.
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4.Proof of income, such as recent pay stubs or bank statements.
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5.Any documentation that supports your claims of financial hardship.
How to submit IRS 656-L
Once completed, IRS 656-L can be submitted through several channels:
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1.Mail: Send the form directly to the address specified in the form instructions based on your state.
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2.Fax: Some taxpayers may be able to submit by fax, depending on their situation.
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3.Online: While the IRS does not allow electronic submission for IRS 656-L specifically, you can use online tools to fill it out and print it for mailing.
Be mindful of submission deadlines, as delays may impact the evaluation of your offer.
When to update or refile IRS 656-L
There may be instances that require you to update or refile your IRS 656-L:
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1.Change of address: If your residence or business address changes, update the form accordingly.
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2.Changes in financial situation: If your income or expenses significantly change, it may warrant a new offer.
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3.If the IRS doesn’t accept your initial offer, you may need to refile with new information.
What happens if you don’t file IRS 656-L?
Failing to file IRS 656-L or submitting it incorrectly can lead to several consequences:
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1.Continued collection efforts by the IRS, potentially leading to garnishments or liens.
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2.Increased penalties and interest on outstanding debts if not managed promptly.
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3.Legal action could be taken, which may include audits or forced payment arrangements.
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4.Lack of options for tax relief, remaining financially burdened without avenues for negotiation.
It's important for taxpayers to act promptly and correctly when dealing with tax issues to avoid these potential pitfalls.
Fill out IRS 656-L online
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Frequently Asked Questions About the IRS 656-L
What is the IRS 656-L form and why is it important?
The IRS 656-L form is specifically designed for individuals seeking to request a Collection Due Process hearing. This form is crucial because it enables taxpayers to appeal collection actions taken by the IRS, such as levies or garnishments. Understanding how to correctly fill out the IRS 656-L can significantly impact your ability to manage tax debts effectively.
Who needs to fill out the IRS 656-L form?
Anyone who has received a notice of levy or has had their property seized by the IRS is eligible to fill out the IRS 656-L form. This includes individuals and businesses that feel their situation necessitates a review of IRS collection actions. By using the IRS 656-L, taxpayers can potentially reverse undue collection activities.
How do I complete the IRS 656-L form accurately?
Completing the IRS 656-L form requires careful attention to detail to ensure all information is correct. You'll need to provide personal identification details, a description of the dispute, and the reasons for believing the IRS's collection actions are incorrect. Using PDF editing tools like pdfFiller can help streamline the completion process for the IRS 656-L.
What happens after submitting the IRS 656-L form?
After you submit the IRS 656-L form, the IRS will review your request for a Collection Due Process hearing. You will receive a notice indicating the status of your request and the next steps in the process. Stay informed by regularly checking for updates, as the outcome can affect future tax collection efforts related to your tax issues.
Can I submit additional documents with the IRS 656-L form?
Yes, submitting additional documentation with your IRS 656-L form can strengthen your case. This may include receipts, proof of payments, and other relevant financial information. Including these documents helps IRS officials better understand your situation and can aid in reaching a favorable decision during the hearing.
Is there a deadline for filing the IRS 656-L form?
Yes, there is a strict deadline for filing the IRS 656-L form, which is typically within 30 days of receiving a notice of levy or seizure. Failing to file within this timeframe can result in losing your opportunity to contest the IRS's actions. To avoid complications, it is vital to act promptly and efficiently when preparing the IRS 656-L.
What are common mistakes to avoid when filling out the IRS 656-L form?
Common mistakes when filling out the IRS 656-L form include providing incorrect personal information and failing to sign the form. It's also important to ensure that your dispute description is clear and concise. Utilizing tools like pdfFiller can minimize errors by offering templates and prompts to guide you through completing the IRS 656-L accurately.
How can pdfFiller assist with the IRS 656-L form?
pdfFiller offers a comprehensive platform for completing and managing IRS 656-L forms with ease. Users can leverage features like eSignatures, cloud storage, and PDF editing tools to streamline the entire process. This is particularly helpful for those who want to ensure that their IRS 656-L is filled out correctly and submitted on time.
What resources are available for understanding the IRS 656-L form better?
Numerous resources can enhance your understanding of the IRS 656-L form, including IRS publications, legal tax advice websites, and online forums. Additionally, understanding IRS procedures and exploring guides specifically about the IRS 656-L can provide valuable insights. Engaging with tax professionals can also greatly clarify any specific concerns related to your situation.
Can I appeal a decision made after also using the IRS 656-L form?
Yes, if you disagree with the outcome of your IRS 656-L hearing, there are further appeal options available. You may be able to pursue an appeal to the United States Tax Court or other appropriate legal channels. It’s essential to consult with a tax attorney or experienced professional to discuss the nuances following the IRS's determination based on your IRS 656-L submission.
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