IRS 656-PPV Explained

What is IRS 656-PPV?

The IRS 656-PPV is a form used by taxpayers who are looking to offer a compromise to the IRS regarding their tax debts. This form is specifically tailored for the Offer in Compromise (OIC) program, which allows eligible taxpayers to settle their tax debts for less than the total amount owed. Typically, individuals or businesses that are unable to pay their full tax liability consider using this form to seek a resolution that alleviates their financial burden.

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Purpose of IRS 656-PPV

The primary purpose of IRS 656-PPV is to facilitate the Offer in Compromise process. This form serves as a legal document that outlines the taxpayer's financial situation and proposes an amount that the taxpayer believes they can afford to pay, given their current financial circumstances. The IRS reviews this proposal to determine if it meets their criteria for acceptance, thereby allowing taxpayers a chance to eliminate or reduce their tax debts while avoiding bankruptcy or other severe financial repercussions.

Where is IRS 656-PPV used and by whom?

IRS 656-PPV is commonly used by various groups of taxpayers, including:

1.

Individuals: Those facing financial hardship, such as loss of income or unexpected expenses, may use this form to negotiate their tax obligations.
2.

Small Businesses: Companies that are struggling financially may file this form to settle their business tax debts.
3.

Tax Professionals: CPAs and tax advisors often help clients complete IRS 656-PPV as part of their services, ensuring accurate representation of their client's financial status.

Examples of scenarios include an individual with medical debt seeking to lessen their tax liabilities or a small business facing operational losses that wish to negotiate a more manageable tax obligation.

Step-by-step: how to fill out IRS 656-PPV

Completing the IRS 656-PPV involves several steps:

1.

Section 1 – Taxpayer Information: Provide personal details such as name, address, and Social Security number.
2.

Section 2 – Offer Information: Specify the amount you are offering to pay to settle your tax debt. Include a brief explanation of why this amount is reasonable.
3.

Section 3 – Financial Information: Detail your assets, income, expenses, and liabilities to give a complete picture of your financial situation.
4.

Section 4 – Signature: Ensure that all required signatures are included, validating the correctness of the information provided.

Users can conveniently fill out the IRS 656-PPV form using pdfFiller, enabling them to edit, eSign, and submit the form with ease.

Who is required to complete IRS 656-PPV?

Individuals or entities required to complete IRS 656-PPV typically include:

1.

Taxpayers who owe more in taxes than they can realistically pay.
2.

Individuals or businesses with circumstances that significantly impede their ability to pay their full tax obligation.
3.

Those who have received a notice of tax deficiency and wish to challenge that amount.

These groups can use the form as a potential means to settle their tax liabilities through negotiation with the IRS.

Information you need to complete IRS 656-PPV

To successfully fill out IRS 656-PPV, gather the following data:

1.

Your personal identification information, including Social Security number or EIN.
2.

Total amount owed to the IRS.
3.

Details about your income, such as pay stubs or statements.
4.

Information regarding your monthly expenses, including housing, utilities, and debt payments.
5.

A comprehensive list of your assets, like bank accounts and property.

This information is essential for accurately portraying your financial situation to the IRS.

How to submit IRS 656-PPV

There are a few common channels for submitting IRS 656-PPV:

1.

Online submission through the IRS website for those eligible for electronic filing.
2.

Mailing the form to the appropriate IRS address outlined in the instructions for the form.
3.

Utilizing a tax professional who can submit the form on your behalf.

Be mindful of deadlines set by the IRS for submissions to ensure compliance and avoid any late fees.

When to update or refile IRS 656-PPV

Updating or refiling the IRS 656-PPV may be necessary under certain conditions:

1.

Change of address or personal information that may affect the situation.
2.

Any updates in your financial status that could alter your offer amount.
3.

Feedback from the IRS requiring additional information or adjustments to the proposal.

Keeping the IRS informed of any significant changes ensures the process remains transparent and compliant.

What happens if you don’t file IRS 656-PPV?

Failing to file IRS 656-PPV can have several consequences:

1.

Continued accumulation of tax debt along with penalties and interest.
2.

Potential legal action from the IRS to collect the taxes owed.
3.

Negative impact on your credit score, making future loans or financial opportunities difficult.

It is crucial to address tax obligations proactively to avoid complications and financial distress.

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Frequently Asked Questions About the IRS 656-PPV

What is the IRS 656-PPV form used for?

The IRS 656-PPV form is used by taxpayers to propose an installment agreement to the IRS for unpaid tax liabilities. This form helps individuals structure their tax payments over time, making it easier to manage debts owed to the IRS. By submitting the IRS 656-PPV, taxpayers can request a more manageable payment schedule and seek relief from financial stress.

Who needs to fill out the IRS 656-PPV form?

Individuals or businesses that owe a significant amount in taxes and wish to propose a payment plan should fill out the IRS 656-PPV form. This is particularly useful for those who may be facing financial difficulties or cannot pay their tax balance in full. By filling out the IRS 656-PPV form, taxpayers can outline their ability to pay over time, making it a vital tool for tax management.

How can I submit the IRS 656-PPV form?

The IRS 656-PPV form can be submitted via mail to the appropriate address specified in the form's instructions. Be sure to include any supporting documents required and keep a copy of the submitted form for your records. Submitting the IRS 656-PPV through mail allows the IRS to process your request for an installment agreement effectively.

What happens after I submit the IRS 656-PPV form?

After submitting the IRS 656-PPV form, the IRS will review your proposal and may take up to 30 days to respond. They may accept your proposal, request additional information, or deny the request based on your financial situation. It’s important to keep the lines of communication open with the IRS during this process to ensure a satisfactory resolution.

Is there a fee associated with filing the IRS 656-PPV form?

Yes, there is a nominal fee for processing the IRS 656-PPV form if you are proposing an installment agreement. However, fees may vary depending on your payment plan and financial situation. For low-income taxpayers, the fee for filing the IRS 656-PPV may be reduced or waived, providing some relief from the otherwise associated costs.

What types of tax liabilities can I resolve using the IRS 656-PPV form?

You can use the IRS 656-PPV form to resolve various tax liabilities, including individual income tax, business taxes, and some other federal taxes. However, be aware that certain taxes, like payroll taxes, may not qualify for an agreement under this form. Overall, the IRS 656-PPV is a versatile tool to help manage most common tax debts.

How long does it take to get approved after submitting the IRS 656-PPV?

Typically, it can take about 30 days to hear back after submitting the IRS 656-PPV form. During this period, the IRS will evaluate your financial situation and payment proposal to determine whether to accept or adjust your installment agreement. Promptly responding to any requests for additional information from the IRS can also expedite the approval of your IRS 656-PPV request.

Can I appeal if my IRS 656-PPV proposal is rejected?

Yes, if your IRS 656-PPV proposal is rejected, you have the right to appeal the decision within a certain time frame. To do this, you’ll need to provide additional documentation or information the IRS may have used to make their assessment. Engaging a tax professional can help you navigate the appeal process and bolster your case effectively.

What information do I need to complete the IRS 656-PPV form?

To complete the IRS 656-PPV form, you will need to provide personal information, details about your tax liabilities, and your proposed monthly payment based on your financial ability. It’s also important to include information about your income, expenses, and any assets you may own that could impact your proposal. Accurate and complete information ensures the IRS can assess your request smoothly.

Can I modify my payment plan after filing the IRS 656-PPV?

Yes, you can modify your payment plan after filing the IRS 656-PPV, but you must submit a new proposal to the IRS for consideration. If your financial situation changes, such as a loss of income or unforeseen expenses, you need to formally request an adjustment. Keeping the IRS informed about your situation is key to ensuring that your payment plan remains manageable.

Author:

by Iryna Marchuk

Lead Writer/Blogs Manager at airSlate

Disclaimer: This content is for informational purposes only. It is not legal or other professional advice. airSlate provides this material on an "as-is" basis and disclaims all representations, guarantees, or warranties, whether express, implied, or statutory, including but not limited to warranties of merchantability, fitness for a particular purpose, or accuracy.