Form 656-B (OIC): Offer in Compromise Booklet

Form 656-B (OIC) provides general information and forms used when preparing and submitting an offer in compromise for certain federal tax liabilities.

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Introduction

Form 656-B (OIC), Offer in Compromise Booklet, is generally used by taxpayers who are considering an offer in compromise to resolve certain federal tax liabilities. The booklet provides information and forms that may be used to prepare an offer and provide applicable financial information.

This guide provides general information about Form 656-B (OIC), including who may use it, the information commonly needed, and the basic process for preparing an offer in compromise. The information is intended to provide a simple overview of Form 656-B (OIC) and its general purpose.

What Is Form 656-B (OIC)?

Form 656-B (OIC) is generally an offer in compromise booklet that provides information and forms used in the offer in compromise process. An offer in compromise generally allows an eligible taxpayer to propose resolving certain federal tax liabilities for an amount that may be less than the total amount owed.

The booklet generally includes Form 656, Offer in Compromise, along with applicable financial information forms and instructions. The specific forms and information needed can depend on the taxpayer’s circumstances, financial situation, tax liabilities, and type of offer.

Who Uses Form 656-B (OIC)?

Form 656-B (OIC) is generally used by taxpayers who are considering or preparing an offer in compromise. Individuals, businesses, and other eligible taxpayers may use the booklet when applicable.

Eligibility and offer requirements can depend on the taxpayer’s financial circumstances, ability to pay, income, expenses, assets, liabilities, tax compliance, and type of tax debt. Not every taxpayer or tax liability will qualify for an offer in compromise.

What Information Is Needed?

The information needed to prepare an offer using Form 656-B (OIC) generally comes from the taxpayer’s tax records, financial records, income records, bank records, asset information, liability records, and other supporting documentation. Accurate information can help support the offer.

Common information includes:

Taxpayer name
Address
Social Security number or employer identification number
Tax periods involved
Type of tax liability
Tax debt information
Income information
Employment or business information
Bank and financial account information
Asset information
Monthly living expenses
Other liabilities
Proposed offer amount
Payment terms
Supporting financial and tax records

The specific information required may depend on the taxpayer, type of tax liability, financial circumstances, offer type, payment arrangement, and other applicable circumstances.

How to Fill Out/Complete Form 656-B (OIC)

Form 656-B (OIC) is generally used as a guide for gathering the information and completing the forms needed to prepare an offer in compromise. The process generally involves reviewing the booklet, gathering tax and financial records, completing the applicable forms, determining the proposed offer, and reviewing the submission before filing.

The basic process is to gather tax and financial records, review the applicable offer requirements, complete Form 656 and applicable financial information forms, provide supporting information, determine the proposed offer amount and payment terms, review the completed documents, and submit the offer according to the applicable requirements. Taxpayers should retain copies of the completed forms and supporting records.

Section 1

Review the general offer in compromise information contained in the booklet. This generally provides an overview of the offer process, applicable requirements, and information that may be needed.

Taxpayers should review the applicable information carefully before preparing an offer. The taxpayer’s specific circumstances should generally be considered when determining which forms and information apply.

Section 2

Gather the taxpayer’s identifying information. This generally includes the taxpayer’s name, address, Social Security number or other taxpayer identification number, and other applicable information.

The identifying information should generally agree with the taxpayer’s tax records. Taxpayers should review this information carefully before completing the applicable offer forms.

Section 3

Identify the tax liabilities included in the offer. This generally involves identifying the applicable tax type, tax periods, and other information associated with the federal tax debt.

The taxpayer should generally review tax account records and other applicable documentation when identifying the liabilities included in the offer. Only applicable tax liabilities should generally be included.

Section 4

Complete the applicable individual financial information. Individual taxpayers may need to provide information about income, expenses, assets, liabilities, bank accounts, investments, and other financial matters.

The financial information should generally be complete and accurate. Taxpayers should use current financial records and retain documentation supporting the amounts reported.

Section 5

Complete the applicable business financial information when the offer involves a business taxpayer. This may include business income, expenses, assets, liabilities, bank accounts, accounts receivable, inventory, and other applicable business information.

Business taxpayers should generally use current accounting and financial records when preparing the applicable information. Supporting business records should be retained with the offer documentation.

Section 6

Complete Form 656, Offer in Compromise. This generally identifies the taxpayer, tax liabilities included in the offer, proposed offer amount, payment terms, and other applicable offer information.

The information entered on Form 656 should generally be consistent with the taxpayer’s financial information and supporting records. Taxpayers should review the proposed offer and payment terms carefully before signing.

Section 7

Determine the proposed offer amount and applicable payment terms. The proposed amount generally reflects what the taxpayer is offering to pay toward resolving the applicable tax liabilities.

The proposed amount and payment terms should generally be supported by the taxpayer’s financial information. Taxpayers should review their financial records and applicable offer requirements before finalizing the offer.

Section 8

Complete applicable signatures, certifications, and authorization information. The taxpayer or an authorized person generally signs the applicable forms when required.

The person signing should generally have the appropriate authority to submit the offer. Signatures, dates, certifications, and other required information should be reviewed before submission.

Final Review

Review all applicable forms and information prepared using Form 656-B (OIC). Check the taxpayer information, tax liabilities, tax periods, income, expenses, assets, liabilities, proposed offer amount, payment terms, supporting records, signatures, and other applicable information.

A final review can help identify incorrect or incomplete information before the offer is submitted. Taxpayers should retain Form 656, applicable financial information forms, Form 656-B (OIC), supporting financial records, tax records, and other documentation associated with the offer.

Common Mistakes

Common Form 656-B (OIC) mistakes may include using incomplete taxpayer information, identifying incorrect tax liabilities, or providing incorrect tax periods. Errors involving income, expenses, assets, liabilities, or other financial information can also affect an offer.

Other mistakes may include failing to complete applicable forms, providing unsupported financial amounts, using outdated or incomplete information, overlooking applicable payment requirements, failing to provide required signatures, or submitting the offer without reviewing all supporting documentation. Comparing the completed forms with the taxpayer’s tax, financial, and accounting records can help identify potential errors.

Related IRS Forms

Taxpayers may encounter other federal tax forms when preparing an offer in compromise, providing financial information, requesting tax records, or addressing federal tax liabilities.

Common related forms include:

Form 656 for making an offer in compromise
Form 433-A (OIC) for certain individual financial information associated with an offer in compromise
Form 433-B (OIC) for certain business financial information associated with an offer in compromise
Form 433-F for certain collection financial information
Form 9465 for requesting an installment payment arrangement
Form 8821 for authorizing the release of tax information to a designated person
Form 2848 for certain powers of attorney and representative authorization

The appropriate form depends on the taxpayer’s circumstances, financial situation, type of tax liability, and applicable tax debt resolution process.

Where to File or Submit

Forms prepared using Form 656-B (OIC) are generally submitted according to the applicable offer in compromise requirements. The appropriate submission process can depend on the taxpayer, type of tax liability, offer, payment terms, and other applicable circumstances.

Taxpayers should review the applicable submission requirements before submitting an offer. A copy of Form 656, applicable financial information forms, payment records, tax records, and supporting documentation should generally be retained for the taxpayer’s files.

Current IRS Form & Instructions

Taxpayers should use the applicable version of Form 656-B (OIC) and the forms and instructions contained within the applicable booklet when preparing an offer in compromise. Federal forms, requirements, and procedures can change, so the materials used should correspond with the applicable request and circumstances.

Before submitting an offer, review Form 656-B (OIC), Form 656, applicable financial information forms, and related instructions. Confirm that the taxpayer information, tax liabilities, financial information, proposed offer amount, payment terms, supporting records, and signatures are accurate.

Important Information / Disclaimer

This Form 656-B (OIC) guide is provided for general informational purposes only and is intended to provide a basic overview of Form 656-B (OIC) and common information associated with preparing an offer in compromise. This information is not tax, legal, accounting, or financial advice, and offer in compromise requirements can vary depending on the taxpayer, tax liabilities, financial circumstances, payment terms, and other applicable circumstances.

Taxpayers are responsible for determining their applicable filing, payment, financial disclosure, recordkeeping, and tax debt resolution requirements. The information on this page may not cover every situation, exception, or special rule that may apply. When appropriate, taxpayers should consider seeking assistance from a qualified tax professional, attorney, enrolled agent, certified public accountant, or other qualified advisor regarding their specific tax situation or Form 656-B (OIC) requirements.