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IRS Form 656 Offer in Compromise
What Is IRS Form 656?
IRS Form 656, Offer in Compromise , is a formal document prepared and filed by a taxpayer to clarify the terms of the agreement they wish to enter to settle their tax debt.
Alternate Name:
- IRS Form for Offer in Compromise.
If you are eligible, you must prove it by submitting documentation that shows you cannot pay off your debt to the government in full - certify you made all tax payments on time yet you are struggling financially as an individual or business so that tax authorities accommodate you by offering an agreement suitable for both sides.
This statement was issued by the Internal Revenue Service (IRS) on April 1, 2023 - previous editions of the form are now obsolete. Download an IRS Form 656 fillable version below.
A Spanish version of IRS Form 656 is available for spanish-speaking filers.
Form 656 Instructions
Follow these guidelines to complete IRS Form 656:
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Inform the recipient about the use of a pre-qualifier tool before the filing - while this step is not mandatory, it is advised to refer to this instrument to see whether the taxpayer is or is not eligible for the agreement with fiscal authorities.
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Provide information about the taxpayer - add their full name and taxpayer identification number . The document has to identify their spouse in case the couple wants to get a joint offer and list the contact details of both individuals.
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Indicate the tax periods you want the offer to cover - you have to check the boxes that apply in your case and record the details of your business if you are filing the form to deal with a sole-proprietor tax debt.
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Confirm you qualify for a low-income certification - put a tick in the box that reflects your current financial situation in relation to your income and household size . The document will guide you in regard to the income in different states and U.S. territories.
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Disclose information about your entity if you submit the statement on behalf of your organization . It is required to state your legal name, addresses, telephone number, and employer identification number as well as identify the person that can be contacted to discuss the matter at hand. List the tax periods you want the offer to apply to.
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Specify the reason behind your intention to enter into an agreement with tax organs . It is possible you do not have enough income and assets to handle your tax debt or your company is dealing with financial hardship.
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Select a payment option you are comfortable with . It may be a single payment or an installment agreement that lets you pay off the debt step-by-step. Taxpayers are allowed to choose what tax periods and debts their payments apply to. You must also indicate the source of money that will be used for upcoming payments.
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Certify your willingness to be bound by the terms of the agreement . The form must be signed and dated by the taxpayer, their spouse or corporate officer authorized to act on behalf of the entity, and the tax professional hired to fill out the documentation if applicable.
Download IRS Form 656 Offer in Compromise
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