Fresh Start Tax L.L.C. IRS Tax Experts A Professional Tax Firm Since 1982 “A” Rated by the Better Business Bureau
We are former IRS Agents, Managers and Instructors who taught the IRS Tax Debt Settlement Program called the Offer in Compromise.
We have over 60 years with the Internal Revenue Service.
I would not suggest anyone file an offer without having a true tax professional reviewing and preparing the offer because the odds of IRS accepting the offer will be slim. But for those of you who brave, here is the process.
1. How to File an Offer in Compromise
2 . What is an Offer In Compromise?
3. What You Must Know Before You File an Offer in Compromise
Do You Qualify for an Offer in Compromise?
The Form 656-B, Offer in Compromise Booklet (PDF) contains information about filing an offer in compromise, worksheets, and all forms necessary to file an offer in compromise.
When submitting an offer in compromise (OIC), taxpayers must use the most current version of Form 656, Offer in Compromise (PDF), or Form 656-L, Offer in Compromise (Doubt as to Liability) (PDF), depending on the basis of the offer in compromise.
Taxpayers should file Form 656 when there is doubt that the liability could be collected in full through a lump sum or an installment agreement and file Form 656-L when it is believed that the tax liability is incorrect. Taxpayers may not file offers concurrently claiming both that the tax liability is incorrect along with an inability to pay the liability.
In most cases, taxpayers must submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B, Collection Information Statement for Businesses. Neither the Form 433-A nor Form 433-B is required when a taxpayer submits an OIC based solely as to doubt as to liability.
How Many Forms 656 and Application Fees are Required?
The general rule when determining how many offers and application fees are necessary is “one fee and form per entity”. The Form 656-B contains an Offer in Compromise Application Fee and Payments matrix to assist you in determining the number of Forms 656 and application fees required. Examples:
A married couple owing the same joint income tax liability may file only one Form 656 listing the joint liability. One fee of $150 should be attached to the Form 656. A married couple opting to file separate offers to compromise the same joint liability may do so, but two $150 application fees will be required.
When a married couple owes a joint liability and one spouse also owes an individual (non-joint) liability, two OICs and two application fees are needed.
A divorced, separated or married couple living apart may still file one From 656 listing their joint liability and pay only one $150 fee as long as all the taxes owed are joint liabilities. Taxpayers in these situations that opt to file separate offers must pay a $150 application fee for each offer that is submitted for consideration.
Note: These examples assume that the taxpayers do not meet one of the exceptions for paying the application fee: the OIC is filed under doubt as to liability or the taxpayer has completed and attached Form 656-A to Form 656. Keys to Success in the Offer in Compromise Program:
Explore all collection options before submitting an offer in compromise
Complete the “Is Your Offer in Compromise Processable?” checklist located in the Form 656-B, Offer in Compromise Booklet. Submit all required documentation Complete all items on Form 656, Offer in Compromise Include all required fees and payments Be current with all filing and paying requirements (estimated taxes and federal tax deposits) and remain current Respond promptly to all requests for additional information Complete all items on Form 433-A or Form 433-B
Where to File Form 656
Residents of: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Mississippi, Montana, Nevada, New Mexico, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin or Wyoming:
If you are a wage earner, retiree, or a self-employed individual without employees; then mail Form 656 and all attachments to:
Memphis Internal Revenue Service Center COIC Unit PO Box 30803 AMC Memphis, TN 38130-0804
If you are other than a wage earner, retiree, or self-employed individual without employees; then mail Form 656 and all attachments to:
Memphis Internal Revenue Service Center COIC Unit PO Box 30804, AMC Memphis, TN 38130-0804
Residents of: Arkansas, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, West Virginia, or have a foreign address:
If you are a wage earner, retiree, or a self-employed individual without employees; then mail Form 656 and all attachments to:
Brookhaven Internal Revenue Service Center COIC Unit PO Box 9007 Holtsville, NY 11742-9007
If you are other than a wage earner, retiree, or a self-employed individual without employees; then mail form 656 and all attachments to:
Brookhaven Internal Revenue Service Center COIC Unit PO Box 9008 Holtsville, NY 11742-9008
Where to File Form 656-L (Doubt as to Liability)
Brookhaven Internal Revenue Service COIC Unit PO Box 9008 Holtsville, NY 11742-9008
In addition to accessing the Form 656 and Form 656-L online, you may obtain it by calling the IRS toll free number 1-800-829-3676 or by visiting your local IRS office.
