Understanding the IRS Substitute for Return
Click to ask Mike Ask Mike The Internal Revenue Service (IRS) Substitute for Return (SFR) is a term many taxpayers
Offer In Compromise
Navigating the intricacies of tax debt can be a daunting journey, but for those seeking a fresh financial start, the Offer In Compromise (OIC) program offers a promising avenue. This comprehensive guide unravels the step-by-step process of submitting an OIC application to the Internal Revenue Service (IRS). From assessing eligibility to awaiting the IRS decision, each step is meticulously outlined, providing clarity on form submissions, supporting documentation, and crucial considerations. Whether you’re facing substantial tax debts or exploring avenues for resolution, this guide equips you with the knowledge to navigate the OIC process effectively and make informed decisions about your financial future. Here is a general step-by-step guide:
Steps you need to know:
1. Assess Your Eligibility and Gather Financial Information:
Understand Eligibility Criteria:
Before proceeding, ensure you meet the IRS eligibility criteria. Consider factors such as income, expenses, asset equity, and ability to pay.
Gather Financial Documents:
Collect documents related to income, including pay stubs, profit and loss statements, and additional income sources.
Compile expense-related documents such as rent or mortgage statements, utility bills, and loan or credit card statements.
Provide information about assets and outstanding debts or liabilities.
Understand Eligibility Criteria:
Gather Financial Documents:
2. Complete Required Forms and Review Documentation Requirements:
Fill Out Forms:
Complete Form 656 (Offer in Compromise) accurately and thoroughly.
Complete Form 433-A or 433-B (business) to provide additional financial information.
Review Documentation Requirements:
Refer to the instructions for Form 656 and other related forms to understand the specific documentation requirements.
Ensure consistency between your supporting documents and the information entered on your application forms.
Fill Out Forms:
Review Documentation Requirements:
3. Calculate Non-refundable Offer Payment and Prepare Your Application Package:
Calculate Offer Payment:
Determine the total offer amount you’re willing to offer as a settlement for your tax debt.
Calculate 20% of the total offer amount as the non-refundable offer payment.
Consider any application fees that may apply.
Include Payment with Application:
Prepare documentation to prove your ability to make the required initial payment.
Submit the total initial payment along with your application package.
Calculate Offer Payment:
Include Payment with Application:
4. Submit Your Offer Package and Await IRS Review:
Submit Your Application:
Verify the completeness and accuracy of your application package, including all forms and supporting documentation.
Consider including a cover letter summarizing your application contents.
Mail your application to the appropriate IRS address, ensuring it is organized and clearly labeled.
Monitor Application Status:
Use online tools or contact the IRS directly to monitor the status of your application.
Review any correspondence from the IRS promptly and respond to requests for additional information.
Submit Your Application:
Monitor Application Status:
5. Await Decision and Respond Accordingly:
Exercise Patience:
Understand that the IRS review process may take several months.
Be patient and continue to meet your ongoing tax obligations.
Review Decision Notice:
Once a decision is made, carefully review the decision notice from the IRS.
Follow any instructions provided, whether your offer is accepted, rejected, or requires modifications.
Exercise Patience:
Review Decision Notice:
Form 656 & 433 with quick guide: Download this form - Click Here
Form 656: Download this form - Click Here
Form 433-A: Download this form - Click Here
Form 433-B (business): Download this form - Click Here
Resource Links:
Offer in Compromise (OIC) Overview: Click Here to learn more
Understanding the Offer in Compromise: Click Here to learn more
Understanding Three Types of IRS (OICs): Click Here to learn more
What Is the Offer in Compromise Form 656-L:
Click Here to learn more
What Is the Offer in Compromise Form 656-B: Click Here to learn more
Important Tip: It is recommended to contact the IRS directly to obtain the most up-to-date information, as there is a possibility that the address details provided here may have changed since the time of writing.
Sending Form 656 varies depending on your place of residence. If you live in Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Mississippi, New Mexico, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, or Washington, you should mail your form to:
Memphis IRS Center COIC Unit
P.O. Box 30803, AMC Memphis, TN 38130-0803.
Phone: 1-844-398-5025
Residents of states not listed above or individuals residing in a foreign country should send their form to:
Brookhaven IRS Center COIC Unit P.O. Box 9007 Holtsville, NY 11742-9007
Phone: 1-844-805-4980
Sending Form 656 varies depending on your place of residence. If you live in Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Mississippi, New Mexico, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, or Washington, you should mail your form to:
Residents of states not listed above or individuals residing in a foreign country should send their form to:
Important Tip: Before submitting an application for any of the IRS's tax programs, you should make sure that you are in complete compliance and carefully review this information. - Click Here for compliance
Conclusion: In conclusion, pursuing an Offer In Compromise (OIC) for tax debt relief involves a detailed process, from assessing eligibility to submitting forms and supporting documentation. Accuracy and prompt responses to IRS requests are crucial. Seeking professional advice can enhance the application’s success. Patience is key during the review process. While an OIC offers potential relief, outcomes may vary. It’s important to stay informed about IRS procedures and approach the process with a clear understanding.
Important Tip: Not sure where to begin? Try our Tax Relief Finder tool. It helps you find IRS programs and gives recommendations for the best solution. Learn about our - Tax Relief Program Finder
Important Tip: Understanding the Tax-Relief process is an essential resource for individuals dealing with tax debt. It offers a road map guide, simplifying the steps needed to resolve tax-related issues- Tax-Relief Process
Ask Mike
You can now ask our AI assistant any questions you have about your tax debt or any tax-related issues. Whether you’re unsure about payment plans, need clarification on penalties, or want information on how to resolve your tax situation. Our AI is ready to assist you with all your tax-related concerns.
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Disclaimer: This is educational content, not legal, accounting, or tax advice.Â
