Offer in Compromise or otherwise known as OIC is some kind of agreement that you come with the IRS. Here, the IRS will settle all your tax liabilities in lesser amount than what you owe. You can apply for this compromise by just filling out Form 656.
While filling out the offer in compromise IRS form, you need to understand that you will be filling out three different forms. They are,
- Form 433-B or also known as the form that collects all the information on the business statement.
- Form 656, also known as the Offer in Compromise
- Form 433-A, also known as the information collection form about all the information regarding self-employed individuals and wage earners.
The Working of Form 656
The possibility of adding up the debt starts when you fail to pay the tax payments regularly. The missed payments will make you fall into a huge financial debt with some increased rate of interest and accrue penalties. The higher the debt, the higher the chances of not being able to take care of them. This is when the idea of Form 656 will be of great help to you.
Eligibility to Use this Form 656
The main reasons for using Form 656 are listed below.
- The doubts about the collectability of the tax debts
- The doubts about having liability for paying the debts
- Some exceptional circumstances can lead to effective tax administration.
People that are interested in applying for the offer in compromise form can get the Form 656 booklet downloaded from any of the IRS websites. The form can be filled out online and with the help of an income tax professional. This form requires you to fill out a lot of information in the form including some things that are not easy to understand. Hence, it is suggested to fill out the form with the help of a professional.
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