Form 656

What is the Form 656

The 2021 Form 656 is an official document used by taxpayers in the United States to apply for an Offer in Compromise (OIC) with the Internal Revenue Service (IRS). This form allows individuals to settle their tax debts for less than the full amount owed, based on their ability to pay. The form is critical for those who find themselves unable to meet their tax obligations due to financial hardship. Understanding the purpose and implications of this form is essential for anyone considering this option.

How to use the Form 656

Using the 2021 Form 656 involves a systematic approach to ensure that all necessary information is accurately provided. Taxpayers must complete the form by providing their personal details, including name, address, and Social Security number. Additionally, they must disclose their financial situation, including income, expenses, and assets. It's important to follow the instructions carefully to avoid delays in processing. Once completed, the form must be submitted to the IRS along with the required fee and any supporting documentation.

Steps to complete the Form 656

Completing the 2021 Form 656 requires several key steps:

• Gather necessary financial documents, including income statements and expense records.
• Fill out the form accurately, ensuring all personal and financial information is correct.
• Calculate your offer amount based on your ability to pay, using the IRS guidelines.
• Include any required fees, such as the application fee or initial payment.
• Review the form for completeness before submission.

Legal use of the Form 656

The legal use of the 2021 Form 656 is governed by IRS regulations. To be considered valid, the form must be filled out correctly and submitted in accordance with IRS guidelines. This includes providing truthful information regarding one's financial situation and ensuring that all required fees are paid. Failure to comply with these regulations can result in the rejection of the offer or further legal complications.

Eligibility Criteria

To qualify for an Offer in Compromise using the 2021 Form 656, taxpayers must meet specific eligibility criteria. These include having a valid tax liability, being unable to pay the full amount owed, and demonstrating that settling for less is in the best interest of both the taxpayer and the IRS. Additionally, individuals must not be in an open bankruptcy proceeding and must have filed all required tax returns.

Required Documents

Submitting the 2021 Form 656 requires several supporting documents to substantiate the offer. These typically include:

• Proof of income, such as pay stubs or tax returns.
• Documentation of monthly expenses, including bills and living costs.
• Details of assets, including bank statements and property valuations.
• Any other relevant financial information that supports the offer.

Form Submission Methods

The 2021 Form 656 can be submitted to the IRS through various methods. Taxpayers may choose to file the form by mail, ensuring that it is sent to the correct IRS address based on their location. Alternatively, some taxpayers may opt to submit the form electronically, if eligible, which can expedite the processing time. It is important to keep a copy of the submitted form and any correspondence with the IRS for personal records.