656
Offer in Compromise
Form 656 is used when applying for an offer in compromise (OIC). The IRS About page describes an OIC as an agreement between the taxpayer and the IRS that settles tax liabilities for less than the full amount owed. The form lists the tax periods to compromise, the reason for the offer, the offer amount and the payment terms, and sets out the offer terms the taxpayer agrees to.
This PDF is the form-only version. A warning on its first page says it is not a stand-alone form and is intended for tax professional use only, and that individuals requesting an offer use Form 656-B, the booklet that includes the instructions and the Form 433-A (OIC) and Form 433-B (OIC) financial statements. For an offer based on doubt as to liability, the About page points to Form 656-L.
You can fill out the PDF free in your browser on this page and download the result without an account.
Individual information and tax periods for Form 1040 filers, or business information and tax periods for Form 1120, 1065 and other filers. One or the other is filled out, not both. Page 2 holds the Low-Income Certification chart.
One of three boxes: Doubt as to Collectibility, Effective Tax Administration for economic hardship, or Effective Tax Administration for public policy or equity.
Lump Sum, paid in 5 or fewer payments within 5 or fewer months of acceptance with 20% of the offer sent up front, or Periodic Payment, paid in full in 6 to 24 months.
Designation of payment, electronic payment details, the source of funds, and boxes confirming filing, estimated tax and federal tax deposit requirements.
Terms a) to x), covering kept payments and refunds, the five year compliance period, the waiver of the time limit to assess tax, tax liens and public inspection of accepted offers.
Signatures of the taxpayer and the spouse or authorized corporate officer, the paid preparer block, and an IRS use only line for accepting the waiver.
Fill in the individual section or the business section, not both, and list every year or period owed by type, such as Form 1040, Form 941, Form 940 or the Trust Fund Recovery Penalty.
Individuals and sole proprietors compare adjusted gross income, or household gross monthly income x 12, against the family size chart. The form says those who qualify do not include any payments with the offer.
Check only one reason. Both Effective Tax Administration boxes, and special circumstances under Doubt as to Collectibility, call for an attached detailed explanation.
Check one payment option and enter the offer in whole dollars. The form says the offer is to be more than $0. A lump sum offer also shows the 20% initial payment and the remaining balance.
Name a tax period for payments if wanted, list payments made through EFTPS or the Individual Online Account, say where the funds come from, and check the filing and tax payment boxes.
Sign and date. For representation during the offer investigation, the form says to attach a valid, signed Form 2848; Form 8821 lets a third party receive confidential information but not represent you in a Collection matter.
You get the real form, filled in a browser tab, with nothing standing between you and the finished PDF.
The form says to pay the $205 fee and the initial payment when submitting Form 656, unless the Low-Income Certification applies.
Payments can be made through EFTPS or the Individual Online Account, or by personal check, cashier's check or money order payable to the "United States Treasury" and attached to the front of the form. The fee and offer payment are paid separately.
The form names the IRS centralized offer in compromise unit in Memphis/Brookhaven and refers to the mailing instructions on page 29 of Form 656-B. Individual taxpayers may file through their Individual Online Account.
The form asks for a complete copy of any tax return filed within 10 weeks of the offer submission, and says not to include original tax returns.
The form says the offer is accepted by law unless the IRS gives written notice otherwise within 24 months of the date the centralized offer unit received it.
The form says the right to an Appeals hearing is waived if a hearing is not requested in writing within 30 days of the rejection notice. The About page links a request for appeal of an offer in compromise.
656-B
842 fields, 32 pages
433-A
425 fields, 8 pages
433-B
267 fields, 6 pages
656-L
117 fields, 10 pages
13711
40 fields, 2 pages
2848
92 fields, 2 pages
The taxpayer making the offer signs the form. This form-only version is meant for tax professionals preparing a complete offer package.
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The warning on page 1 says the form-only version is intended for tax professional use, and that individuals requesting an offer use Form 656-B, which includes the instructions and financial statements.
The form lists a $205 fee, paid with the initial payment when the offer is submitted, unless the Low-Income Certification applies.
The About page says the Individual Online Account (IOLA) can be used to determine eligibility to file an OIC, file the OIC online and make any required payments.
For an offer based on doubt as to liability, the About page points to Form 656-L, which includes its own instructions.
The form's terms say the payments are not returned even if the offer is withdrawn, rejected or returned, and the IRS keeps the application fee unless the offer is not accepted for processing.
The terms say the taxpayer agrees to file and pay all taxes on time for five years from acceptance, and that tax liens for the listed periods are generally released within 45 days after the final payment is received and verified.
