Understanding IRS Form656: An Overview

IRS Form656 might seem challenging at first glance, but that doesn’t mean it is indecipherable. Here at Brightside Tax Relief, we specialize in simplifying complex tax matters, and IRS Form 656 is no exception. At its core, IRS Form 656 is an Offer in Compromise (OIC) application that offers you a way to settle your tax debt for less than the amount you owe. It might seem like a daunting task to fill out this form, but there is no need to fret. This article is your first step in the journey to demystifying the mysteries surrounding IRS Form656.

An Introduction to IRS Form656

Before tackling any form, it’s essential to understand what it stands for. IRS Form 656, or the “Offer in Compromise,” is for taxpayers who have an outstanding tax debt they cannot fully pay off. With this Form, the IRS is essentially saying, “We understand you can’t pay the full amount now, so let’s negotiate.” By submitting Form 656, you are offering to pay a specific amount that is less than the total due to clear your debt. However, approval of an OIC is not a sure thing as the IRS is stringent about who qualifies.

Who Can File IRS Form656?

Not everyone with tax debt can apply for an OIC via Form 656. The IRS has established stringent eligibility requirements:

• Applicant must have filed all tax returns.
• Applicant must have received at least one billing notice for any outstanding tax debt.
• Business owners with employees must be up-to-date with all payroll tax deposits and filings.
• Applicants must not be in bankruptcy proceedings.

Do remember, meeting these prerequisites does not guarantee your offer will be accepted. The IRS looks into your income, expenses, asset equity, and more when determining whether or not to accept your offer.

Filing IRS Form656

Filing Form 656 might seem rigorous, but with careful planning, it’s manageable. Here’s a breakdown of the step-by-step process.

• Verify your eligibility: Only those who meet the criteria we outlined above should proceed with filing Form 656.
• Calculate offer amount: This involves a thorough analysis of your financial situation. It’s advised to seek professional help to ensure accuracy.
• Complete Form 656: Carefully fill in all necessary information. Be sure to double-check everything before submitting.
• Attach $186 application fee & initial payment: Note, there are categories of individuals who can waive this fee. Find more information in the IRS instructions for Form 656.

Sending and Waiting for Response

After you’ve filled out and reviewed your Form 656, you can send it to the IRS. They will then review it and check whether it’s in their best interests to accept your offer. The decision-making process can take up to two years. During this time, it is important to stay on top of any communication from the IRS and to continue making payments where possible.

What Happens When Your Offer is Accepted or Rejected?

If your offer is accepted, you can choose to pay in a lump sum or installments. If rejected, you can appeal within 30 days of the decision. It’s crucial to remember that rejection doesn’t necessarily mean the end of the road. You can revise and resubmit your form or seek other tax relief options.

Why You Should Hire a Tax Professional

While it’s technically possible to prepare and file IRS Form 656 on your own, it isn’t advisable. Misunderstandings can become hurdles, causing unnecessary stress. Furthermore, mistakes might result in rejection, which potentially leaves you still in significant debt. Consider seeking advice from professionals like Brightside Tax Relief to navigate this complicated process efficiently.

A Final Word

Nobody likes facing tax debt, and IRS Form656 might seem like an intimidating hurdle. But rest assured, understanding and completing it is attainable. Remember that help is always available. With the right aid like that which Brightside Tax Relief provides, you can stride confidently toward putting your tax worries behind you.