656 Offer in Compromise 2020-2025 Form

What is the Form 656 L Offer In Compromise

The Form 656 L, also known as the Offer in Compromise (OIC), is a tax form used by taxpayers to negotiate a settlement with the Internal Revenue Service (IRS) regarding their tax liabilities. This form allows individuals to propose a reduced amount to settle their tax debts based on their financial situation. The IRS considers various factors, including income, expenses, and asset equity, to determine whether to accept the offer. The goal is to provide a manageable resolution for taxpayers facing financial hardship.

Steps to Complete the Form 656 L Offer In Compromise

Completing the Form 656 L involves several important steps:

1. Gather Financial Information: Collect detailed information about your income, expenses, and assets. This includes pay stubs, bank statements, and documentation of any debts.
2. Fill Out the Form: Accurately complete all sections of the Form 656 L, ensuring that you provide truthful and complete information.
3. Include Required Documentation: Attach necessary documents that support your financial situation, such as proof of income and expense records.
4. Submit the Form: Send the completed form and all supporting documents to the appropriate IRS address, ensuring you keep copies for your records.

Eligibility Criteria for the Form 656 L Offer In Compromise

To qualify for the Offer in Compromise using Form 656 L, taxpayers must meet specific eligibility criteria set by the IRS. These criteria include:

• Demonstrating an inability to pay the full tax liability due to financial hardship.
• Being current on all required tax filings and payments.
• Not being in an open bankruptcy proceeding.

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

Required Documents for Form 656 L Submission

When submitting the Form 656 L, it is crucial to include various documents that substantiate your financial situation. Required documents may include:

• Proof of income, such as recent pay stubs or tax returns.
• Documentation of monthly expenses, including bills and receipts.
• Records of assets, such as bank statements and property valuations.

Providing comprehensive documentation increases the likelihood of your offer being accepted by the IRS.

IRS Guidelines for Form 656 L Processing

The IRS has established guidelines that govern the processing of Form 656 L. These guidelines outline the evaluation process for offers in compromise, including:

• Reviewing the taxpayer's financial information to assess their ability to pay.
• Determining whether accepting the offer is in the best interest of both the taxpayer and the IRS.
• Communicating the decision to the taxpayer, which may include acceptance, rejection, or a counteroffer.

Understanding these guidelines can help taxpayers navigate the OIC process more effectively.

Form Submission Methods for Form 656 L

Taxpayers can submit the Form 656 L through various methods, including:

• Online Submission: Some taxpayers may be eligible to submit their offer electronically through the IRS portal.
• Mail: The completed form can be mailed to the designated IRS address based on the taxpayer's location.
• In-Person Submission: Taxpayers may also schedule an appointment to submit the form in person at a local IRS office.

Choosing the appropriate submission method can impact the processing time of the offer.