IRS Form 656 Offer in Compromise

What Is IRS Form 656?

This is a tax form that was released by the Internal Revenue Service (IRS) - a subdivision of the U.S. Department of the Treasury on August 1, 2019. As of today, no separate filing guidelines for the form are provided by the IRS.

FAQ

Q: What is IRS Form 656?A: IRS Form 656 is a document used to propose an Offer in Compromise (OIC) to the Internal Revenue Service (IRS).

Q: What is an Offer in Compromise (OIC)?A: An Offer in Compromise (OIC) is a program offered by the IRS that allows taxpayers to settle their tax debt for less than the full amount owed.

Q: Who is eligible to submit an Offer in Compromise?A: Individuals or businesses who are unable to pay their tax debt in full and can demonstrate that the offered amount is the most they can reasonably pay.

Q: What information is required on IRS Form 656?A: IRS Form 656 requires detailed financial information, including assets, income, and expenses, to determine the taxpayer's ability to pay.

Q: What is the process to submit an Offer in Compromise?A: The process includes completing IRS Form 656, providing supporting documentation, and paying a non-refundable fee. The IRS will evaluate the offer based on the taxpayer's financial situation.

Q: What happens after submitting an Offer in Compromise?A: After submitting an Offer in Compromise, the IRS will review the proposal and either accept, reject, or make a counteroffer. It is important to continue making payments during the review process.

Q: Are there any fees associated with submitting an Offer in Compromise?A: Yes, there is a non-refundable application fee and an initial payment required with the offer. Low-income taxpayers may qualify for a reduced fee.