656 2020-2025 Form

What is the Form 656 B Rev 4

The Form 656 B Rev 4, commonly known as the Offer in Compromise booklet, is an official document provided by the IRS. It is used by taxpayers to propose a settlement of their tax debt for less than the full amount owed. This form is particularly relevant for individuals who may be experiencing financial hardship and are unable to pay their tax liabilities in full. The form outlines the necessary steps and requirements for submitting an offer to the IRS, making it a crucial resource for those seeking relief from tax burdens.

How to use the Form 656 B Rev 4

Using the Form 656 B Rev 4 involves several key steps. First, taxpayers must determine their eligibility for an Offer in Compromise by reviewing IRS guidelines. Once eligibility is confirmed, the taxpayer should complete the form accurately, providing detailed information about their financial situation. This includes income, expenses, and assets. After completing the form, it must be submitted to the IRS along with the required fee and supporting documentation to substantiate the offer. Properly following these steps increases the likelihood of acceptance by the IRS.

Steps to complete the Form 656 B Rev 4

Completing the Form 656 B Rev 4 requires careful attention to detail. Here are the essential steps:

• Gather financial information: Collect all necessary documents that reflect your income, expenses, and assets.
• Fill out the form: Provide accurate information in all required fields, including personal details and financial disclosures.
• Calculate your offer: Determine an appropriate amount to offer based on your financial situation and IRS guidelines.
• Review and sign: Ensure all information is correct, then sign the form to validate your submission.
• Submit the form: Send the completed form along with the required fee and documentation to the appropriate IRS address.

Legal use of the Form 656 B Rev 4

The legal use of the Form 656 B Rev 4 is governed by IRS regulations. To ensure that the offer is legally binding, taxpayers must comply with all requirements set forth by the IRS. This includes submitting accurate information and adhering to deadlines. An accepted offer in compromise can legally settle a taxpayer's debt with the IRS, but it is crucial to understand that any misrepresentation or failure to comply with IRS rules can result in penalties or rejection of the offer.

Eligibility Criteria

To qualify for an Offer in Compromise using the Form 656 B Rev 4, taxpayers must meet specific eligibility criteria. These include:

• Demonstrating an inability to pay the full tax liability.
• Providing evidence of financial hardship, such as income below necessary living expenses.
• Being compliant with all filing and payment requirements for the previous tax years.

Meeting these criteria is essential for the IRS to consider the offer seriously.

Required Documents

When submitting the Form 656 B Rev 4, taxpayers must include several supporting documents to substantiate their offer. These typically include:

• Proof of income, such as pay stubs or tax returns.
• Documentation of monthly expenses, including bills and other financial obligations.
• A completed Form 433-A (OIC) or Form 433-B (OIC), detailing financial information.

Providing comprehensive documentation helps the IRS evaluate the offer effectively.