The Irs form 656 is a document used to apply for an Offer in Compromise. This form can be used by individuals or businesses to request that the Internal Revenue Service (IRS) consider a reduction in the amount of taxes owed. The form must be completed correctly and accurately in order to be considered by the IRS. The Offer in Compromise program is often used as a way to reduce tax debt when other methods, such as payment plans, are not available or feasible. Completing the Irs form 656 correctly is critical, as any mistakes may delay or prevent your application from being approved. For more information on how to complete this form, consult an experienced tax professional.
If you would like first understand how much time you will need to fill in the irs form 656 and what number of pages it's got, here is some basic information that may be useful.
| Question | Answer |
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| Form Name | Irs Form 656 |
| Form Length | 8 pages |
| Fillable? | No |
| Fillable fields | 0 |
| Avg. time to fill out | 2 min |
| Other names | form 656 a, 656, low income certification guidelines form 656, 656 form |
WARNING!!!
The attached Form 656 is not a
Form 656 |
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Department of the Treasury — Internal Revenue Service |
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Offer in Compromise |
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(April 2021) |
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►To: Commissioner of Internal Revenue Service |
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IRS Received Date |
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In the following agreement, the pronoun "we" may be assumed in place of "I" when there are joint liabilities and both parties are signing this agreement.
I submit this offer to compromise the tax liabilities plus any interest, penalties, additions to tax, and additional amounts required by law for the tax type and period(s) marked in Section 1 or Section 2 below.
Did you use the
Yes No
Note: The use of the
Include the $205 application fee and initial payment (personal check, cashier's check, or money order) with your Form 656 unless you qualify for the
Section 1 |
Individual Information (Form 1040 filers) |
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If you are a 1040 filer, an individual with personal liability for Excise tax, individual responsible for Trust Fund Recovery Penalty,
Your first name, middle initial, last name |
Social Security Number (SSN) |
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If a joint offer, spouse's first name, middle initial, last name |
Social Security Number (SSN) |
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Your home physical address (street, city, state, ZIP code, county of residence) |
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Your home mailing address (if different from above or post office box number)
Is this a new address
If yes, would you like us to update our records to this address
Your Employer Identification Number (if applicable)
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Yes No
Yes No
Individual Tax Periods (If Your Offer is for Individual or
1040 Income
Trust Fund Recovery Penalty as a responsible person of (enter business name)
for failure to pay withholding and Federal Insurance Contributions Act taxes (Social Security taxes), for period(s) ending
941 Employer's Quarterly Federal Tax Return - Quarterly period(s)
940 Employer's Annual Federal Unemployment (FUTA) Tax Return - Year(s)
Other Federal Tax(es) [specify type(s) and period(s)]
Note: If you need more space, use attachment and title it “Attachment to Form 656 dated |
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attachment. |
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Warning: The IRS will not compromise any amounts of restitution assessed by the IRS. Any liability arising from restitution is excluded from this offer. Also, the IRS will not compromise any liability for which an election under IRC § 965(i) is made; such liabilities are excluded from this offer. Any offer containing a liability for which payment is being deferred under IRC § 965(h)(1) can only be processed for investigation if an acceleration of payment under section 965(h)(3) and the regulations thereunder has occurred and no portion of the liability to be compromised resulted from entering into a transfer agreement under section 965(h)(3).
Catalog Number 16728N |
www.irs.gov |
Form 656 (Rev. |
Page 2
Do you qualify for
Note: By checking one of the boxes below you are certifying that your adjusted gross income or your household’s gross monthly income x 12 and size of your family qualify you for the
I qualify for the
I qualify for the
IF YOU QUALIFY FOR THE
Payment - By checking this box I am requesting all money to be applied to my tax debt.
Deposit - By checking this box I am requesting all money to be treated as a deposit. If my offer is not accepted I request my deposit be
applied to my tax liability (initial here |
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). Failure to initial that my deposit be applied will result in refund of the deposit amount. |
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Please note that failure to check either box or checking both boxes above will result in all payments being applied to your tax debt and not returned to you. Do not complete deposit section on page 4 if you have checked the deposit section here.
Size of family unit |
48 contiguous states, D.C., and U.S. Territories |
Alaska |
Hawaii |
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1 |
$31,900 |
$39,875 |
$36,700 |
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2 |
$43,100 |
$53,875 |
$49,575 |
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3 |
$54,300 |
$67,875 |
$62,450 |
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4 |
$65,500 |
$81,875 |
$75,325 |
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5 |
$76,700 |
$95,875 |
$88,200 |
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6 |
$87,900 |
$109,875 |
$101,075 |
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7 |
$99,100 |
$123,875 |
$113,950 |
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8 |
$110,300 |
$137,875 |
$126,825 |
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For each additional person, add |
$11,200 |
$14,000 |
$12,875 |
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Section 2 |
Business Information (Form 1120, 1065, etc., filers) |
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If your business is a Corporation, Partnership, LLC, or LLP and you want to compromise those tax debts, you must complete this section. You must also include all required documentation including the Form
Business name
Business physical address (street, city, state, ZIP code)
Business mailing address (street, city, state, ZIP code)
Employer Identification Number
(EIN)
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Name and title of primary contact
Telephone number
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Business Tax Periods (If Your Offer is for Business Tax Debt Only)
1120 Income
941 Employer's Quarterly Federal Tax Return - Quarterly period(s)
940 Employer's Annual Federal Unemployment (FUTA) Tax Return - Year(s)
Other Federal Tax(es) [specify type(s) and period(s)]
Note: If you need more space, use attachment and title it “Attachment to Form 656 dated |
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.” Make sure to sign and date the |
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attachment. |
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Catalog Number 16728N |
www.irs.gov |
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Form 656 (Rev. |
Page 3
Section 3 |
Reason for Offer |
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Doubt as to Collectibility - I do not have enough in assets and income to pay the full amount.
Exceptional Circumstances (Effective Tax Administration) - I owe this amount and have enough in assets and income to pay the full amount, but due to my exceptional circumstances, requiring full payment would cause an economic hardship or collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner. I am submitting the written narrative below explaining my circumstances.
Explanation of Circumstances (Add additional pages, if needed) – The IRS understands that there are unplanned events or special circumstances, such as serious illness, where paying the full amount or the minimum offer amount might impair your ability to provide for yourself and your family. If this is the case and you can provide documentation to prove your situation, then your offer may be accepted despite your financial profile. If applicable, describe your special circumstances below and attach appropriate documents to this offer application.
Section 4 |
Payment Terms |
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Check only one of the payment options below to indicate how long it will take you to pay your offer in full. You must |
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offer more than $0. The offer amount should be in whole dollars only. |
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Lump Sum Cash
Check here if you will pay your offer in 5 or fewer payments within 5 or fewer months from the date of acceptance:
Enclose a check for 20% of the offer amount (waived if you met the requirements for
Total offer amount |
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20% initial payment |
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Remaining balance |
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$ |
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$ |
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You may pay the remaining balance in one payment after acceptance of the offer or up to five payments, but cannot exceed 5 months.
Amount of payment |
$ |
payable within |
Month after acceptance |
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Amount of payment |
$ |
payable within |
Months after acceptance |
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Amount of payment |
$ |
payable within |
Months after acceptance |
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Amount of payment |
$ |
payable within |
Months after acceptance |
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Amount of payment |
$ |
payable within |
Months after acceptance |
Periodic Payment
Check here if you will pay your offer in full in 6 to 24 months
Enter the amount of your offer $
Note: The total months may not exceed a total of 24. For example, if you are requesting your payments extend for 24 months then your first payment is considered to be month 1 and your last payment is considered month 24. There will be 22 payments between the first and last month.
Enclose a check for the first month's payment (waived if you met the requirements for the
The first monthly payment of $ |
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is included with this offer then $ |
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will be received on the |
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day of each month thereafter for |
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months with a final payment of $ |
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to be paid on the |
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day of the |
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month. |
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You must continue to make these monthly payments while the IRS is considering the offer (waived if you met the requirements for Low- Income Certification). Failure to make regular monthly payments until you have received a final decision letter will cause your offer to be returned with no appeal rights.
IRS Use Only
Attached is an addendum dated (insert date)
setting forth the amended offer amount and payment terms.
Catalog Number 16728N |
www.irs.gov |
Form 656 (Rev. |
Page 4
Section 5 |
Designation of Payment, Electronic Federal Tax Payment System (EFTPS), and Deposit |
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Designation of Payment
If you want your payment to be applied to a specific tax year and a specific tax debt, such as a Trust Fund Recovery Penalty, please tell us the tax
year/quarter. If you do not designate a preference, we will apply any money you send to the government's best interest. If you
want to designate any payments not included with this offer, you must designate a preference for each payment at the time the payment is made. However, you cannot designate the application fee or any payment after the IRS accepts the offer.
Note: Payments submitted with your offer cannot be designated as estimated tax payments for a current or past tax year.
Electronic Federal Tax Payment System (EFTPS)
List offer payments made through the Electronic Federal Tax Payment System (EFTPS) below.
Include the 15 digit Electronic Funds Transfer (EFT) Number with each payment.
Offer application fee |
Date |
EFT number |
Offer payment
Date
EFT number
Note: Any Offer Application Fee or initial payment made via EFTPS must be made the same date your offer is mailed.
Deposit
Do not complete if you have checked the
CAUTION: Do NOT designate the amounts sent in with your offer to cover the initial payment and application fee as "deposits." Doing so will result in the return of your offer without appeal rights.
If you are paying more than the initial payment with your offer and you want any part of that payment treated as a deposit, check the box below and insert the amount.
My payment of $ |
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includes the $205 application fee and $ |
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for my first month's payment. I am requesting the |
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additional amount of $ |
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be held as a deposit. |
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If your offer is rejected, returned, or withdrawn please check one of the boxes below and let us know what you would like us to do with your deposit.
Return it to you (Initial here |
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Apply it to your tax debt (Initial here |
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Your deposit will be returned to you, unless you indicated in the above check box that you want it applied to your tax debt.
Section 6 |
Source of Funds, Making Your Payment, Filing Requirements, and Tax Payment Requirements |
Source of Funds
Tell us where you will obtain the funds to pay your offer
Making Your Payment
Include separate checks for the payment and application fee.
Make checks payable to the “United States Treasury” and attach to the front of your Form 656, Offer in Compromise. All payments must be in U.S. dollars. Do not send cash. Send a separate application fee with each offer; do not combine it with any other tax payments, as this may delay processing of your offer. You may also make payments through the Electronic Federal Tax Payment System (EFTPS). Your offer will be returned to you if the application fee and the required payment are not included, or if your check is returned for insufficient funds.
Filing Requirements
I have filed all required tax returns and have included a complete copy of any tax return filed within 12 weeks of this offer submission
I was not required to file a tax return for the following years
Note: Do not include original tax returns with your offer. You must either electronically file your tax return or mail it to the appropriate IRS processing office before sending in your offer.
Tax Payment Requirements (check all that apply)
I have made all required estimated tax payments for the current tax year
I am not required to make any estimated tax payments for the current tax year
I have made all required federal tax deposits for the current quarter
I am not required to make any federal tax deposits for the current quarter
Catalog Number 16728N |
www.irs.gov |
Form 656 (Rev. |
Page 5
Section 7 |
Offer Terms |
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By submitting this offer, I have read, understand and agree to the following terms and conditions:
Terms, Conditions, and Legal a) I request that the IRS accept the offer amount listed in this offer application as payment of my outstanding tax
Agreementdebt (including interest, penalties, and any additional amounts required by law) as of the date listed on this form. I authorize the IRS to amend Section 1 or Section 2 if I failed to list any of my assessed tax debt or tax debt assessed before acceptance of my offer. By submitting a joint offer, both signers grant approval to the Internal Revenue Service to disclose the existence of any separate liabilities owed.
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b) I also authorize the IRS to amend Section 1 or Section 2 by removing any tax years on which there is currently |
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no outstanding liability. I understand that my offer will be accepted, by law, unless IRS notifies me otherwise, in |
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writing, within 24 months of the date my offer was received by IRS. I also understand that if any tax debt that is |
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included in the offer is in dispute in any judicial proceeding that tax debt will not be included in determining the |
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expiration of the |
IRS will keep my payments, |
c) I voluntarily submit the payments made on this offer and understand that they will not be returned even if I |
fees, and some refunds. |
withdraw the offer or the IRS rejects or returns the offer except as otherwise provided in subpart (h) of this section |
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(regarding “deposit” amounts). Unless I designate how to apply each required payment in Section 5, the IRS will |
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apply my payment in the best interest of the government, choosing which tax years and tax debts to pay off. The |
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IRS will also keep my application fee unless the offer is not accepted for processing. |
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d) I understand that if I checked the |
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qualify for the |
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and will not be returned to me unless l designate it as a deposit. In making my deposit I do not have to designate |
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any amounts to the application fee and my first month’s payment. |
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e) The IRS will keep any refund, including interest, that I might be due for tax periods extending through the |
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calendar year in which the IRS accepts my offer. I cannot designate that the refund be applied to estimated tax |
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payments for the following year or the accepted offer amount. If I receive a refund after I submit this offer for any |
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tax period extending through the calendar year in which the IRS accepts my offer, I will return the refund within 30 |
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days of notification. The refund offset does not apply to offers accepted under the provisions of Effective Tax |
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Administration public policy/equity or Doubt as to Collectibility with special circumstances based on public policy/ |
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equity considerations. |
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f) I understand that the amount I am offering may not include part or all of an expected or current tax refund, |
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money already paid, funds attached by any collection action, or anticipated benefits from a capital or net operating |
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loss. |
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g) The IRS will keep any monies it has collected prior to this offer. Under section 6331(k), the IRS may levy on my |
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property and rights to property up to the time that the IRS official signs and acknowledges my offer as pending. |
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The IRS may keep any proceeds arising from such a levy. No levy will be issued on individual shared |
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responsibility payments. However, if the IRS served a continuous levy on wages, salary, or certain federal |
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payments under sections 6331(e) or (h), then the IRS could choose to either retain or release the levy. |
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h) The IRS will keep any payments that I make related to this offer. I agree that any funds submitted with this offer |
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will be treated as a payment unless I checked the box to treat any amount more than the required initial payment |
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as a deposit. For other than |
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treated as a deposit. A |
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with the offer. I also agree that any funds submitted with periodic payments made after the submission of this offer |
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and prior to the acceptance, rejection, or return of this offer will be treated as payments, unless I identify the |
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amount more than the required payment as a deposit on the check submitted with the corresponding periodic |
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payment. A deposit will be returned if the offer is rejected, returned, or withdrawn. I understand that the IRS will |
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not pay interest on any deposit. If the IRS attempts to return a deposit once and it comes back as undeliverable |
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then the IRS will apply the funds to my tax liability. |
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i) If my offer is accepted and my final payment is more than the agreed amount, the IRS will not return the |
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difference, but will apply the entire payment to my tax debt. |
Pending status of an offer and |
j) Once an authorized IRS official signs this form, my offer is considered pending as of that signature date and it |
right to appeal |
remains pending until the IRS accepts, rejects, or returns my offer, or I withdraw my offer. An offer is also |
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considered pending for 30 days after any rejection of my offer by the IRS, and during the time that any rejection of |
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my offer is being considered by the Appeals Office. An offer will be considered withdrawn when the IRS receives |
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my written notification of withdrawal by personal delivery or certified mail or when I inform the IRS of my |
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withdrawal by other means and the IRS acknowledges in writing my intent to withdraw the offer. |
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k) I waive the right to an Appeals hearing if I do not request a hearing in writing within 30 days of the date the IRS |
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notifies me of the decision to reject the offer. |
Catalog Number 16728N |
www.irs.gov |
Form 656 (Rev. |
Page 6
Section 7 (Continued) |
Offer Terms |
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I must comply with my future tax obligations and understand I remain liable for the full amount of my tax debt until all terms and conditions of this offer have been met.
I understand what will happen if I fail to meet the terms of my offer (e.g., default).
I agree to waive time limits provided by law.
I understand the IRS may file a Notice of Federal Tax Lien on my property.
Correction Agreement
I authorize the IRS to contact relevant third parties in order to process my offer.
I am submitting an offer as an individual for a joint liability.
I understand the IRS Shared Responsibility Payment (SRP).
I understand the IRS is required to make certain information public.
l)I will comply with all provisions of the internal revenue laws, including requirements to timely file tax returns and timely pay taxes for the five year period beginning with the date of acceptance of this offer and ending through the fifth year, including any extensions to file and pay. I agree to promptly pay any liabilities assessed after acceptance of this offer for tax years ending prior to acceptance of this offer that were not otherwise identified in Section 1 or Section 2 of this agreement. I also understand that during the five year period I cannot request an installment agreement for unpaid taxes incurred before or after the accepted offer. If this is an offer being submitted for joint tax debt, and one of us does not comply with future obligations, only the
m)I agree that I will remain liable for the full amount of the tax liability, accrued penalties and interest, until I have met all of the terms and conditions of this offer. Penalties and interest will continue to accrue until all payment terms of the offer have been met. If I file for bankruptcy before the terms and conditions of the offer are met, I agree that the IRS may file a claim for the full amount of the tax liability, accrued penalties and interest, and that any claim the IRS files in the bankruptcy proceeding will be a tax claim.
n)Once the IRS accepts my offer in writing, I have no right to challenge the tax debt(s) in court or by filing a refund claim or refund suit for any liability or period listed in Section 1 or Section 2, even if the IRS defaults or rescinds the offer.
o)If I fail to meet any of the terms of this offer, the IRS may revoke the certificate of release of federal tax lien and file a new notice of federal tax lien; levy or sue me to collect any amount ranging from one or more missed payments to the original amount of the tax debt (less payments made) plus penalties and interest that have accrued from the time the underlying tax liability arose. The IRS will continue to add interest, as required by section 6601 of the Internal Revenue Code, on the amount the IRS determines is due after default. I agree that if I provide false information or documents in conjunction with this offer or conceal my assets or my ability to pay, then the IRS may reopen my offer and exercise its discretion in the further treatment of the OIC, including a termination of the offer contract. If the IRS terminates my offer contract, I will be liable for the full amount of the tax liability, accrued penalties and interest.
p)To have my offer considered, I agree to the extension of the time limit provided by law to assess my tax debt (statutory period of assessment). I agree that the date by which the IRS must assess my tax debt will now be the date by which my debt must currently be assessed plus the period of time my offer is pending plus one additional year if the IRS rejects, returns, or terminates my offer or I withdraw it. (Paragraph (j) of this section defines pending and withdrawal.) I understand that I have the right not to waive the statutory period of assessment or to limit the waiver to a certain length or certain periods or issues. I understand, however, that the IRS may not consider my offer if I refuse to waive the statutory period of assessment or if I provide only a limited waiver. I also understand that the statutory period for collecting my tax debt will be suspended during the time my offer is pending with the IRS, for 30 days after any rejection of my offer by the IRS, and during the time that any rejection of my offer is being considered by the Appeals Office.
q)The IRS may file a Notice of Federal Tax Lien during consideration of the offer or for offers that will be paid over time. If the offer is accepted, the tax lien(s) for the periods and taxes listed in Section 1 will be released within 35 days after the final payment has been received and verified. The time it takes to transfer funds to the IRS from commercial institutions varies based on the form of payment. If I have not finished paying my offer amount, then the IRS may be entitled to any proceeds from the sale of my property. The IRS will not file a Notice of Federal Tax Lien on any individual shared responsibility debt.
r)I authorize the IRS, to correct any typographical or clerical errors or make minor modifications to my Form 656 that I signed in connection to this offer.
s)By authorizing the IRS to contact third parties, I understand that I will not be notified of which third parties the IRS contacts as part of the offer application process, including tax periods that have not been assessed, as stated in §7602 (c ) of the Internal Revenue Code. In addition, I authorize the IRS to request a consumer report on me from a credit bureau.
t)I understand if the liability sought to be compromised is the joint and individual liability of myself and my co- obligor(s) and I am submitting this offer to compromise my individual liability only, then if this offer is accepted, it does not release or discharge my
u)If your offer includes any shared responsibility payment (SRP) amount that you owe for not having minimum essential health coverage for you and, if applicable, your dependents per Internal Revenue Code Section 5000A - Individual shared responsibility payment, it is not subject to penalties (except applicable bad check penalty) or to lien and levy enforcement actions. However, interest will continue to accrue until you pay the total SRP balance due. We may apply your federal tax refunds to the SRP amount that you owe until it is paid in full.
v)The IRS is required to make certain information, such as taxpayer name, city/state/zip, liability amount, and offer terms, available for public inspection and review for one year after the date of offer acceptance.
Catalog Number 16728N |
www.irs.gov |
Form 656 (Rev. |
Page 7
Section 8 |
Signatures |
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Under penalties of perjury, I declare that I have examined this offer, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete.
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Signature of Taxpayer/Corporation Name |
Phone number |
Today's date (mm/dd/yyyy) |
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By checking this box you are authorizing the IRS to contact you at the telephone number listed above and leave detailed messages concerning |
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this offer on your voice mail or answering machine. |
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►Signature of Spouse/Authorized Corporate Officer
Phone number
Today's date (mm/dd/yyyy)
By checking this box you are authorizing the IRS to contact you at the telephone number listed above and leave detailed messages concerning this offer on your voice mail or answering machine.
Section 9 |
Paid Preparer Use Only |
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Signature of Preparer |
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Phone number |
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Today's date (mm/dd/yyyy)
By checking this box you are authorizing the IRS to contact you at the telephone number listed above and leave detailed messages concerning this offer on your voice mail or answering machine.
Name of Paid Preparer
Preparer's CAF no. or PTIN
Firm's name (or yours if
If you would like to have someone represent you during the offer investigation, attach a valid, signed Form 2848 with this application or a copy of a previously filed form. Form 2848 allows for representation and receipt of confidential information. You should also include the current tax year on the form, in the list of applicable years or periods.
Form 8821 allows a third party to receive confidential information but they cannot represent you before the IRS in a Collection matter. If you would like a third party to receive confidential information on your behalf attach a copy if previously filed and include the current tax year on the form.
IRS Use Only. I accept the waiver of the statutory period of limitations on assessment for the Internal Revenue Service, as described in Section 7(p).
Signature of Authorized Internal Revenue Service Official
Title
Date (mm/dd/yyyy)
Privacy Act Statement
We ask for the information on this form to carry out the internal revenue laws of the United States. Our authority to request this information is section § 7801 of the Internal Revenue Code.
Our purpose for requesting the information is to determine if it is in the best interests of the IRS to accept an offer. You are not required to make an offer; however, if you choose to do so, you must provide all of the taxpayer information requested. Failure to provide all of the information may prevent us from processing your request.
If you are a paid preparer and you prepared the Form 656 for the taxpayer submitting an offer, we request that you complete and sign Section 9 on Form 656, and provide identifying information. Providing this information is voluntary. This information will be used to administer and enforce the internal revenue laws of the United States and may be used to regulate practice before the Internal Revenue Service for those persons subject to Treasury Department Circular No. 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service. Information on this form may be disclosed to the Department of Justice for civil and criminal litigation. We may also disclose this information to cities, states and the District of Columbia for use in administering their tax laws and to combat terrorism. Providing false or fraudulent information on this form may subject you to criminal prosecution and penalties.
Catalog Number 16728N |
www.irs.gov |
Form 656 (Rev. |