Offer in Compromise | Internal Revenue Service

Apply With the New Form 656

If you apply for an offer in compromise April 25 or late, you must use the April 2022 version of Form 656-B, Offer in Compromise Booklet PDF .
If You’re an Employer
Before you apply, you must make federal tax deposits for the current and past 2 quarters.

An offer in compromise allows you to settle your tax debt for less than the fully measure you owe. It may be a lawful choice if you ca n’t pay your full moon tax indebtedness or doing sol creates a fiscal hardship. We consider your alone fructify of facts and circumstances :

• Ability to pay
• Income
• Expenses
• Asset equity

We generally approve an offer in compromise when the measure you offer represents the most we can expect to collect within a fair period of clock time. Explore all early requital options before you submit an offer in compromise. The offer in Compromise program is not for everyone. If you hire a tax professional to help you file an offer, be certain to check his or her qualifications .

Who Is Eligible

Confirm you ‘re eligible and prepare a preliminary marriage proposal with the extend in Compromise Pre-Qualifier Tool .
You ‘re eligible to apply for an offer in Compromise if you :

• Filed all required tax returns and made all required estimated payments
• Aren’t in an open bankruptcy proceeding
• Have a valid extension for a current year return (if applying for the current year)
• Are an employer and made tax deposits for the current and past 2 quarters before you apply

If You Apply and Are Not Eligible

If you apply for an propose in Compromise and we can ’ triiodothyronine work your offer, we ‘ll :

• Return your application and offer application fee
• Apply any offer payment you included to your balance due

Submit Your Application

receive forms to submit an lotion and bit-by-bit instructions in Form 656-B, Offer in Compromise Booklet PDF .
Complete an application software :

• Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms
• Form 656(s) – you must submit individual and business tax debt (Corporation/ LLC/ Partnership) on separate Forms 656
• $205 application fee (non-refundable)
• Initial payment (non-refundable) for each Form 656.

Select a Payment Option

Your initial requital varies based on your offer and the requital option you choose :

• Lump Sum Cash: Submit an initial payment of 20% of the total offer amount with your application. If we accept your offer, you’ll receive written confirmation. You must pay any remaining balance due on the offer in five or fewer payments.
• Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If IRS accepts your offer, continue to pay monthly until it is paid in full.

If You Meet the Low Income Certification Guidelines

You do n’t have to :

• Send the application fee or the initial payment
• Make monthly installments while we review your offer.

For details, see Form 656-B, crack in Compromise Booklet PDF .

Understand the Process

While IRS evaluates your offer :

• Your non-refundable payments and fees are applied to the tax liability (you may designate payments to a specific tax year and tax debt)
• IRS may file a Notice of Federal Tax Lien
• IRS suspends other collection activities
• Your legal assessment and collection period is extended
• You make all required payments per your offer
• You don’t have to make payments on an existing installment agreement
• Your offer is automatically accepted if the IRS doesn’t not make a determination within two years of the IRS receipt date (This does not include any Appeal period.)

If Your Offer Is Accepted

• You must meet all the Offer Terms listed in Section 7 of Form 656, including filing all required tax returns and making all payments
• IRS doesn’t release federal tax liens until your offer terms are satisfied
• Certain offer information is available for public review by requesting a copy of a public inspection file.

If Your Offer Is Rejected

• You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711  PDF.
• The IRS Independent Office of Appeals offers additional assistance on appealing your rejected offer.