Form 656 Rev 4 Internal Revenue Service 2020

What is the Form 656 Rev 4 Internal Revenue Service

The Form 656, also known as the Offer in Compromise, is a document used by taxpayers to settle their tax debts with the Internal Revenue Service (IRS) for less than the full amount owed. This form allows individuals who are unable to pay their tax liabilities in full to propose a settlement based on their financial situation. The IRS reviews these offers to determine if they are acceptable based on the taxpayer's ability to pay, income, expenses, and asset equity.

How to use the Form 656 Rev 4 Internal Revenue Service

Using the Form 656 involves several steps. Taxpayers must first complete the form accurately, providing detailed financial information, including income, expenses, and assets. It is essential to ensure that all information is truthful and complete, as inaccuracies may lead to rejection of the offer. After completing the form, taxpayers must submit it to the IRS along with the required application fee and any necessary supporting documentation that substantiates their financial claims.

Steps to complete the Form 656 Rev 4 Internal Revenue Service

Completing the Form 656 requires careful attention to detail. Here are the steps to follow:

• Obtain the latest version of the Form 656 from the IRS website.
• Fill out the taxpayer information section, including name, address, and Social Security number.
• Provide a detailed account of your financial situation, including income, expenses, and assets.
• Choose the type of offer you are submitting: Lump Sum Cash or Periodic Payment.
• Include the required application fee and any supporting documentation.
• Review the form for accuracy before submission.
• Mail the completed form to the appropriate IRS address based on your location.

Eligibility Criteria

To qualify for submitting the Form 656, taxpayers must meet specific eligibility criteria set by the IRS. Generally, individuals must demonstrate an inability to pay their tax debt in full and must not be in an open bankruptcy proceeding. Additionally, all tax returns must be filed, and any estimated tax payments must be current. The IRS evaluates each offer based on the taxpayer's financial situation, including income, expenses, and asset equity.

Required Documents

Submitting the Form 656 requires several supporting documents to substantiate the information provided. Taxpayers should include:

• Proof of income, such as pay stubs or bank statements.
• A detailed list of monthly expenses.
• Documentation of assets, including real estate and vehicles.
• Tax returns for the previous three years.

Providing comprehensive documentation helps the IRS assess the offer accurately and expedites the review process.

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

The Form 656 can be submitted to the IRS by mail. Currently, the IRS does not offer an online submission option for this form. Taxpayers should ensure they send the form to the correct address based on their location and the type of tax liability. It is advisable to use a trackable mailing method to confirm receipt by the IRS. In-person submissions are generally not accepted for this form.