656 2018-2025 Form

What is the IRS Form 656

The IRS Form 656 is an official document used by taxpayers to apply for an Offer in Compromise (OIC) with the Internal Revenue Service. This form allows individuals who owe tax debts to negotiate a settlement for less than the full amount owed. The purpose of the form is to provide a structured way for taxpayers to present their financial situation to the IRS, demonstrating their inability to pay the full tax liability. By submitting this form, taxpayers can seek relief from their tax burdens while complying with federal regulations.

How to Obtain the IRS Form 656

To obtain the IRS Form 656, taxpayers can visit the official IRS website, where the form is available for download. It can be found in the forms section, specifically under the Offer in Compromise category. Additionally, taxpayers can request a physical copy by contacting the IRS directly or visiting a local IRS office. It is essential to ensure that the latest version of the form is used, as outdated forms may not be accepted by the IRS.

Steps to Complete the IRS Form 656

Completing the IRS Form 656 involves several key steps to ensure accuracy and compliance. First, taxpayers must provide their personal information, including name, address, and Social Security number. Next, they need to select the type of offer being submitted, whether it is a lump-sum payment or a periodic payment plan. Detailed financial information must be included, such as income, expenses, and assets, to support the claim for an OIC. Finally, the form must be signed and dated before submission to the IRS.

Legal Use of the IRS Form 656

The IRS Form 656 is legally binding once submitted and accepted by the IRS. It is crucial for taxpayers to understand that providing false information on this form can lead to severe penalties, including denial of the offer and potential legal action. Therefore, it is essential to ensure that all information is accurate and truthful. The form serves as a formal request for negotiation, and its acceptance by the IRS signifies a legal agreement to settle the tax debt under the terms specified.

Required Documents

When submitting the IRS Form 656, taxpayers must include several supporting documents to validate their financial claims. These documents typically include:

• Proof of income, such as pay stubs or tax returns
• Documentation of monthly expenses, including bills and receipts
• Asset statements, such as bank statements or property valuations
• Any relevant tax documents that support the offer

Providing comprehensive documentation is vital for the IRS to assess the taxpayer's financial situation accurately.

Eligibility Criteria

To qualify for submitting the IRS Form 656, taxpayers must meet specific eligibility criteria. Generally, individuals must have filed all required tax returns and be current with estimated tax payments. Additionally, the taxpayer's total tax liability must be greater than the amount they can realistically pay. The IRS evaluates the taxpayer's financial condition to determine if an Offer in Compromise is warranted based on their ability to pay and the potential for future earnings.