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

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COMPLETING THE APPLICATION PACKAGEStep 1 – Gather your informationTo calculate an offer amount, you will need to gather information about yourfinancial situation, including cash, investments, available credit, assets, income,and debt.You will also need to gather information about your average gross monthlyhousehold income and expenses. The entire household includes anyone inaddition to yourself that contributes money to pay expenses relating to thehousehold; for example, rent, utilities, insurance, groceries, etc. This is necessaryfor the IRS to accurately evaluate your offer.In general, the IRS will not consider expenses for tuition for private schools,college expenses, charitable contributions, and other unsecured debtpayments as part of the expense calculation.Step 2 – Fill out Form 433-A(OIC), Collection InformationStatement for Wage Earners andSelf-Employed IndividualsFill out Form 433-A (OIC) if you are an individual wage earner and/or operate as asole proprietorship. This will be used to calculate an appropriate offer amountbased on your assets, income, expenses, and future earning potential. You willhave the opportunity to provide a written explanation of any special circumstancesthat affect your financial situation.Note: Sole Proprietors may include business related taxes incurred underan Employer Identification Number, e.g., Forms 941 and 940, on the sameForm 656 used to request compromise of individual income taxes (Form1040).Step 3 – Fill out Form 433-B (OIC),Collection Information Statementfor BusinessesStep 4 – Attach requireddocumentationStep 5 – Fill out Form 656, Offerin CompromiseFill out Form 433-B (OIC) if your business is a Corporation, Partnership, LimitedLiability Company (LLC) classified as a corporation, single member LLC, or othermulti-owner/multi-member LLC. This will be used to calculate an appropriate offeramount based on your business assets, income, expenses, and future earningpotential. If you have assets that are used to produce income (for example, a towtruck used in your business for towing vehicles), you may be allowed to excludeequity in these assets.You will need to attach supporting documentation with Form(s) 433-A (OIC) and433-B (OIC). A list of the documents required will be found at the end of eachform. Include copies of all required attachments. Do not send any originaldocuments.Fill out Form 656. The Form 656 identifies the tax years and type of tax you wouldlike to compromise. It also identifies your offer amount and the payment terms.Step 6 – Include initial paymentand $186 application feeInclude a personal check, cashier's check, or money order for your initial paymentbased on the payment option you selected (20% of offer amount or first month'sinstallment).Note: Future refunds cannot be applied as part or all of the offered amount.Include a separate personal check, cashier's check, or money order for theapplication fee ($186).Make both payments payable to the "United States Treasury." All payments mustbe made in U.S. dollars.If you meet the Low Income Certification guidelines, the initial payment andapplication fee are not required.4
Step 7 – Mail the applicationpackageMake a copy of your application package and keep it for your records.Mail the application package to the appropriate IRS facility. See page 27,Application Checklist, for details.If you are working with an IRS employee, let him or her know you aresending or have sent an offer to compromise your tax debt(s).IMPORTANT INFORMATIONAfter you mail your application,continue to:Promptly reply to any requests for additional information within the timeframespecified. If you selected the option to make monthly payments, you mustcontinue to make the payments during the evaluation of your offer, unlessyou qualify for the Low Income Certification. Failure to reply timely or makemonthly payments may result in the return of your offer without appealrights.If your offer is accepted, you must continue to timely file and pay your taxobligations that become due in the future. If you fail to file and pay any taxobligations that become due within the five years after your offer is accepted(including any extensions) your offer may be defaulted. If your offer is defaulted,you will be liable for the original tax liability, less payments made, and all accruedinterest and penalties. An offer does not stop the accrual of interest and penalties.5
Page 1: Form 656 BookletOffer inCompromiseC
Page 4 and 5: You cannot submit an offer if the I
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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