The request for an OIC based on doubt as to collectibility is made on a Form 656
, Offer in Compromise, which also requires submitting Forms 433-A and/or 433-B, and supporting statements and documents.
With limited exceptions, addressed below, an OIC requires submission of Form 433-A in addition to Form 656
You'll find instructions and the forms for submitting an offer in IRS Form 656
Booklet: Offer in Compromise.
You can make an offer in compromise using Form 656
, which like an installment agreement will require that you pay a fee ($150) for the privilege.
To determine the "reasonable collection potential" of a taxpayer, the taxpayer must complete and file form 656
(offer in compromise) with supporting documentation to substantiate the taxpayer's assets, liabilities, income, and "necessary" living expenses.
The IRS has released a revised Offer in Compromise Form 656
package, adding significant changes as a result of the 2005 Tax Act, including:
With this week's publication of revised tax Form 656
and an array of internal IRS changes underway, the agency is fundamentally changing the Offer in Compromise program.
* Form 656
, Offer in Compromise--individual and business tax debt (corporation/LLC/partnership) must be submitted on separate Forms 656.
, Offer in Compromise, and Form 656-B, Offer in Compromise Booklet, have been revised to reflect these changes.
An Offer in Compromise (Form 656
) is an agreement with the IRS that lets you resolve your tax bill for less than you owe; the general rule is at least 14% of the amount owed must be paid.
The statute of limitation for collection is suspended while an offer is considered pending by the IRS (see Form 656
An offer to compromise a tax liability must be submitted in writing on Form 656
, Offer in Compromise.