Form 656-B, Offer in Compromise Booklet - Internal Revenue Service

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You cannot submit an offer if the IRS has referred your case to the Department ofJustice (DOJ), and the DOJ case includes any of the tax periods you want tocompromise.The law requires the IRS to make certain information from accepted offersavailable for public inspection and review. These public inspection files arelocated in designated IRS Area Offices.A Notice of Federal Tax Lien (lien) gives the IRS a legal claim to your property assecurity for payment of your tax debt. The IRS may file a lien during the offerinvestigation. However, unless a jeopardy situation exists, a lien will usually notbe requested until a final determination has been made on the offer.If your business owes trust fund taxes, responsible individuals may be held liablefor the trust fund portion of the tax. You are not eligible to submit an offer unlessthe trust fund portion of the tax is paid or the Trust Fund Recovery Penaltydeterminations have been made on all potentially responsible individual(s). Trustfund taxes are the money withheld from an employee's wages, such as incometax, Social Security, and Medicare taxes.The IRS may levy your assets up to the time that the IRS official signs andacknowledges your offer as pending. In addition, the IRS may keep any proceedsreceived from the levy. If your assets are levied after your offer is pending,immediately contact the IRS person whose name and phone number is listed onthe levy.If you currently have an approved installment agreement with the IRS and aremaking installment payments, then you may stop making the payments when yousubmit an offer. If your offer is not accepted, your installment agreement with IRSwill be reinstated with no additional fee.PAYING FOR YOUR OFFERApplication feeOffers require a $186 application fee.EXCEPTION: If you are an individual or are operating as a sole proprietorshipand your household income meets the Low Income Certification guidelines, youwill not be required to send the application fee.Payment optionsYou must select a payment option and include the payment with your offer. Theamount of the initial payment and subsequent payments will depend on the totalamount of your offer and which of the following payment options you choose:Lump Sum Cash: This option requires 20% of the total offer amount to be paidwith the offer and the remaining balance paid in 5 or fewer payments within 5 orfewer months of the date your offer is accepted.Periodic Payment: This option requires the first payment with the offer and theremaining balance paid within 24 months, in accordance with your proposed offerterms. Under this option, you must continue to make monthly paymentswhile the IRS is evaluating your offer. Failure to make these payments willcause your offer to be returned. There is no appeal. Total payments mustequal the total Offer Amount.EXCEPTION: If you are an individual or are operating as a sole proprietorshipand your household income meets the Low Income Certification guidelines, youwill not be required to send the initial payment or make the monthly paymentsduring the evaluation of your offer.2
If your offer is not accepted, any required payment(s) made with your offer andthereafter, will not be refunded. Your payment(s) will be applied to your tax debt.If you do not have sufficient cash to pay for your offer, you may need to considerborrowing money from a bank, friends, and/or family. Other options may includeborrowing against or selling other assets.Note: If you are planning to use your retirement savings from an IRA or 401kplan, you may have future tax liabilities owed as a result. Contact the IRS oryour tax advisor before taking this action.HOW TO APPLYApplication processThe application must include:•••••Form 656, Offer in CompromiseCompleted Form 433-A (OIC), Collection Information Statement for WageEarners and Self-Employed Individuals, if applicableCompleted Form 433-B (OIC), Collection Information Statement forBusinesses, if applicable$186 application fee, unless you meet Low Income CertificationInitial offer payment, unless you meet Low Income CertificationNote: Your offer cannot be considered without the collection informationstatement(s), Form 433-A (OIC) and/or 433-B (OIC).If you and your spouse owejoint and separate tax debtsIf you have joint tax debt(s) with your spouse and one of you also has separatetax debt(s), you and your spouse will need to send in one Form 656 with all of thejoint tax debt(s) and a second Form 656 with the separate tax debt(s), for a totalof two Forms 656.If you and your spouse have joint tax debt(s) and you are also each responsiblefor separate tax debt(s), you will each need to send in a separate Form 656. Youwill complete one Form 656 for yourself listing all your joint and separate tax debtsand your spouse will complete one Form 656 listing all his or her joint andseparate tax debts, for a total of two Forms 656.If you and your spouse or ex-spouse have a joint tax debt and your spouse or exspousedoes not want to be part of the offer, you on your own may submit a Form656 to compromise your responsibility for the joint tax debt.Each Form 656 will require the $186 application fee and initial down paymentunless you are an individual or are operating as a sole proprietorship and meetthe Low Income Certification guidelines.If you owe individual andbusiness tax debtIf you have individual and business tax debt that you wish to compromise, you willneed to send in two Forms 656. Complete one Form 656 for your individual taxdebts and one Form 656 for your business tax debts. Each Form 656 will requirethe $186 application fee and initial down payment.Note: A business is defined as a corporation, partnership, or any businessthat is operated as other than a sole-proprietorship.3
Page 1: Form 656 BookletOffer inCompromiseC
Page 6 and 7: COMPLETING THE APPLICATION PACKAGES
Page 9 and 10: Form 433-A (OIC)(Rev. January 2014)
Page 11 and 12: Page 3 of 8Section 3 (Continued)Per
Page 13 and 14: Page 5 of 8Section 5 (Continued)Des
Page 15 and 16: Page 7 of 8Section 7Monthly Househo
Page 17 and 18: Form 433-B (OIC)(Rev. January 2014)
Page 19 and 20: Page 3 of 6Section 2 (Continued)Bus
Page 21: Section 5Calculate Your Minimum Off
Page 24 and 25: Section 3Reason for OfferPage 2 of
Page 26 and 27: Page 4 of 6Section 7Source of Funds
Page 28 and 29: Section 10Paid Preparer Use OnlyPag
Page 32: Form 656-B (Rev. 1-2014) Catalog Nu

Form 656-B, Offer in Compromise Booklet - Internal Revenue Service

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