Offer 2023-2025 Form

What is the Form 656 Booklet Offer In Compromise

The Form 656 Booklet, also known as the Offer In Compromise (OIC), is a crucial document provided by the IRS that allows taxpayers to settle their tax debts for less than the full amount owed. This program is designed for individuals who cannot pay their tax liabilities in full or who would face financial hardship if they did. The booklet provides detailed instructions on how to apply for this program, including eligibility criteria, necessary documentation, and the overall process. Understanding the Form 656 is essential for anyone considering this option to resolve their tax issues effectively.

Steps to complete the Form 656 Booklet Offer In Compromise

Completing the Form 656 requires careful attention to detail to ensure all information is accurate. The process typically involves the following steps:

• Gather necessary documents: Collect financial information, including income, expenses, and assets, to support your application.
• Fill out the Form 656: Complete the form accurately, providing all required personal and financial details. Ensure that you select the appropriate offer type based on your situation.
• Complete the Form 433-A or 433-B: Depending on whether you are an individual or a business, you will need to fill out the corresponding financial disclosure form to provide the IRS with a clear picture of your financial situation.
• Review your application: Double-check all entries for accuracy and completeness before submission.
• Submit your application: Send your completed forms and any required documentation to the appropriate IRS address as indicated in the Form 656 Booklet.

Legal use of the Form 656 Booklet Offer In Compromise

The Form 656 is legally recognized as a binding agreement between the taxpayer and the IRS once accepted. To ensure its legal validity, it must be completed in accordance with IRS guidelines and submitted with the required fee. This form allows taxpayers to negotiate their tax liabilities, and upon acceptance, the IRS agrees to settle the debt for the amount specified in the offer. It is important to understand that submitting this form does not automatically halt collection actions; taxpayers must ensure compliance with all IRS requests during the review process.

Eligibility Criteria

To qualify for the Offer In Compromise program, taxpayers must meet specific eligibility criteria set by the IRS. These include:

• Inability to pay: Taxpayers must demonstrate that they cannot pay their tax debts in full without experiencing financial hardship.
• Compliance with tax obligations: Applicants must be current with all filing requirements and not have any outstanding tax returns.
• Reasonable collection potential: The IRS will evaluate the taxpayer's financial situation to determine if the offered amount is acceptable based on their ability to pay.

Required Documents

When submitting the Form 656, certain documents are required to support the application. These typically include:

• Form 433-A or 433-B: These forms provide detailed financial information about the taxpayer's income, expenses, and assets.
• Proof of income: Recent pay stubs, bank statements, or other documentation that verifies income sources.
• Proof of expenses: Documentation showing monthly living expenses, such as housing, utilities, and medical costs.
• Tax returns: Copies of recent tax returns to ensure compliance with IRS filing requirements.

Form Submission Methods (Online / Mail / In-Person)

Submitting the Form 656 can be done through various methods, depending on the taxpayer's preference and the specific requirements outlined by the IRS. The primary submission methods include:

• Mail: The most common method, where the completed form and supporting documents are sent to the designated IRS address.
• Online submission: Certain taxpayers may have the option to submit their offer electronically through the IRS website, streamlining the process.
• In-person: While not typical, some taxpayers may choose to deliver their forms directly to an IRS office, especially if they have questions or need assistance.