IRS Form 656 Offer in Compromise Instructions
IRS Form 656 is used for submitting an Offer in Compromise to settle tax debts with the IRS. This file includes details on qualifications for the offer and necessary documentation requirements. It’s essential for individuals and businesses seeking debt relief from the Internal Revenue Service.
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How do I fill this out?
Filling out IRS Form 656 requires attention to detail. Begin by confirming your eligibility for an offer in compromise, then gather the necessary financial documents. Finally, complete the form accurately and submit it along with required fees.
How to fill out the IRS Form 656 Offer in Compromise Instructions?
1
Confirm your eligibility for the offer in compromise.
2
Gather all necessary financial documentation and forms.
3
Complete Section 1 or Section 2 based on your tax status.
4
Include the required fee and initial payment if applicable.
5
Submit the completed form to the IRS with correct payment.
Who needs the IRS Form 656 Offer in Compromise Instructions?
1
Individuals with significant tax debts may need this form to settle owed amounts.
2
Self-employed persons liable for unpaid taxes can use this form to reduce their tax burden.
3
Sole proprietorship owners facing financial difficulties might utilize Form 656 for compromise.
4
Businesses that are struggling to pay their federal taxes should submit this form to negotiate.
5
Deceased taxpayers' estates may require this form to resolve outstanding tax liabilities.
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What are the instructions for submitting this form?
To submit Form 656, complete the form with accurate information and required documentation. Mail the form to the designated IRS address as noted in the instructions, along with the $205 application fee unless you qualify for a waiver. Use certified mail for tracking, ensuring you have evidence of your submission.
What are the important dates for this form in 2024 and 2025?
Form 656 must be submitted as part of the Offer in Compromise process. Ensure you are aware of fiscal deadlines related to your tax liablities and adjustments. For 2024, ensure all submissions are completed by the respective deadlines to avoid penalties.
What is the purpose of this form?
The purpose of IRS Form 656 is to allow individuals and businesses to negotiate a settlement for their tax debts with the IRS. It provides a structured way for taxpayers to request forgiveness or reduction of owed amounts based on their financial situation. Through this form, the IRS can assess whether the taxpayer qualifies for an offer in compromise based on their income, expenses, and assets.
Tell me about this form and its components and fields line-by-line.
- 1. First Name: Your first name as it appears on your tax return.
- 2. Last Name: Your last name as it appears on your tax return.
- 3. Social Security Number: Your SSN for verifying your identity.
- 4. Tax Periods: The specific years or periods for which the compromise is requested.
- 5. Income Information: Details about your income and financial situation.
What happens if I fail to submit this form?
Failure to submit Form 656 can result in the IRS pursuing tax liabilities without any settlement. This may lead to further financial penalties, wage garnishments, or other collections actions. It is crucial to respond promptly to IRS communications to avoid escalation.
- Increased Tax Liability: Tax debts may increase due to penalties and interest.
- Collection Actions: The IRS may initiate collections such as wage garnishments.
- Loss of Settlement Opportunity: You may lose the chance to negotiate a lower tax liability.
How do I know when to use this form?
- 1. Unmanageable Tax Debt: If your tax debts exceed your current financial capacities.
- 2. Financial Hardship: In cases of job loss or unforeseen expenses affecting income.
- 3. Business Closures: Businesses that have ceased operations and can no longer meet tax obligations.
Frequently Asked Questions
What is Form 656?
Form 656 is used to submit an Offer in Compromise to resolve tax debts with the IRS.
Who needs to fill out this form?
Individuals and businesses with IRS tax liabilities seeking relief may need this form.
Can I edit this PDF online?
Yes, you can easily edit this PDF on PrintFriendly using our intuitive tools.
How do I submit Form 656?
Submit the completed form to the IRS along with any required fees.
Is there a fee for submitting Form 656?
Yes, a non-refundable fee of $205 is typically required unless you qualify for a waiver.
What does the Low-Income Certification require?
It confirms your adjusted gross income falls below a certain threshold for your family size.
How can I sign the PDF?
You can add your signature directly in the PDF editor before downloading.
Is this form mandatory for offer submissions?
Yes, Form 656 is mandatory for submitting an Offer in Compromise.
What happens after I submit this form?
The IRS will review your offer and determine if it meets their criteria for acceptance.
Can I save my edited PDF?
Currently, you can download your edited PDF directly after making changes.
