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 April 1, 2021. 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 the Offer in Compromise application.

Q: What is an Offer in Compromise?A: An Offer in Compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed.

Q: When should I consider filing an Offer in Compromise?A: You should consider filing an Offer in Compromise if you are unable to pay your tax debt in full and you meet certain eligibility criteria.

Q: What are the eligibility criteria for an Offer in Compromise?A: The eligibility criteria include having filed all required tax returns, making all required estimated tax payments for the current year, and being current with all federal tax deposit requirements for the current quarter.

Q: What should I include with my Form 656?A: You should include a completed Form 433-A(OIC) or Form 433-B(OIC), a $205 application fee, and an initial payment.

Q: How long does it take for the IRS to process an Offer in Compromise?A: The processing time can vary, but it generally takes several months to a year.

Q: Will filing an Offer in Compromise stop collection activities?A: Filing an Offer in Compromise generally suspends collection activities, including any levies or wage garnishments.

Q: Is an Offer in Compromise guaranteed to be accepted?A: No, there is no guarantee that the IRS will accept an Offer in Compromise. It depends on the individual circumstances and the taxpayer's ability to pay.

Q: Can I appeal if my Offer in Compromise is rejected?A: Yes, you can appeal the IRS's decision if your Offer in Compromise is rejected.

Q: Should I seek professional help when filing an Offer in Compromise?A: It is recommended to seek professional help, such as a tax attorney or a certified public accountant, when filing an Offer in Compromise to ensure the best possible outcome.