What Is the Offer in Compromise Form 656-B

One avenue available to taxpayers burdened by substantial tax debt is the Offer in Compromise (OIC) program. Form 656-B serves as the cornerstone of this program, outlining the terms and conditions for settling tax liabilities for less than the full amount owed. This article aims to provide a detailed exploration of Form 656-B, shedding light on its significance, intricacies, and implications for taxpayers seeking relief from their tax obligations.

What is Form 656-B? Form 656-B, also known as the Offer in Compromise Booklet, is a crucial document provided by the Internal Revenue Service (IRS) for individuals and businesses aiming to resolve tax debts through the Offer in Compromise program. This booklet contains detailed instructions, eligibility criteria, and necessary forms required to initiate the OIC process.

Eligibility Criteria:

Before submitting Form 656-B, taxpayers must determine their eligibility for the Offer in Compromise program. The IRS considers various factors, including the taxpayer’s ability to pay, doubt as to liability, and effective tax administration.

Completing Form 656-B:

A. Personal Information: Taxpayers need to provide detailed personal information such as their name, address, Social Security Number (SSN), and contact details. B. Tax Debts: The form requires disclosure of all outstanding tax liabilities, including types of taxes owed, tax periods, and amounts owed. C. Offer Terms: Taxpayers must propose an offer amount, typically a fraction of the total tax debt, based on their ability to pay and IRS guidelines. D. Payment Options: Form 656-B offers various payment options, including a lump-sum cash offer or periodic payments. E. Submission Requirements: Alongside Form 656-B, taxpayers must submit a non-refundable application fee and initial payment as stipulated by the IRS.

Financial Disclosure:

A detailed financial disclosure section requires taxpayers to provide comprehensive information about their income, expenses, assets, and liabilities. This information enables the IRS to assess the taxpayer’s financial situation accurately.

Evaluation Process:

Upon receiving Form 656-B, the IRS initiates a thorough review process, including verifying information, conducting a financial analysis, considering offer terms, and communicating with the taxpayer.

Acceptance or Rejection: After evaluation, the IRS communicates its decision regarding the offer. Acceptance requires taxpayers to fulfill the terms outlined in Form 656-B, while rejection allows taxpayers to appeal or explore alternative options.

Appeals and Negotiations:

Taxpayers have the right to appeal a rejected offer through the IRS Office of Appeals. They can also engage in negotiations with the IRS to explore alternative settlement options.

Compliance and Finalization:

Upon acceptance, taxpayers must comply with all tax obligations and adhere to the terms outlined in Form 656-B to avoid offer revocation.

Conclusion:

Form 656-B plays a crucial role in the Offer in Compromise program, providing instructions and requirements for taxpayers seeking relief from tax debts. Understanding Form 656-B and adhering to its requirements are essential for navigating the OIC process successfully. With careful consideration and compliance, taxpayers can pursue a path toward resolving their tax liabilities and achieving financial stability.