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Phone Screener
“We are conducting a research study for the IRS to determine the effectiveness of
some of its forms and instructions. The study is voluntary and your identity will remain
anonymous. The forms will take about 90 minutes to complete. It involves reading
and filling in forms and attending a focus group the following week to discuss the
forms completion process.
What is your gender?
( ) Male
( ) Female
What is your age?
( ) 18–29
( ) 30–39
( ) 40–49
( ) 50–59
( ) 60+
What is your marital status?
( ) Married
( ) Single
( ) Divorced/Separated
( ) Widowed
Which of the following categories includes your annual household income?
( ) Under $25,000
( ) $25,000–$34,999
( ) $35,000–$49,999
( ) $50,000–$75,000
( ) $100,000–$149,000
( ) $150,000 or more
( ) Prefer not to say
Are you of Hispanic or Latino origin?
( ) Yes
( ) No
What is your race? Please select one or more.
( ) White
( ) Black or African American
( ) Asian
( ) Native Hawaiian or other Pacific Islander
( ) American Indian or Alaska Native
6
In which state is your primary residence?
(Please select)
We have a few preliminary questions to further determine your eligibility:
Are you at least 18–years–old?
Have you paid federal taxes in the past 5 years?”
The Paperwork Reduction Act requires that the IRS display an OMB control number
on all public information requests. The OMB Control Number for this study is 15451349. Also, if you have any comments regarding the time estimates associated with
this study or suggestions on making this process simpler, please write to the Internal
Revenue Service, Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP,
1111 Constitution Ave. NW, Washington, DC 20224.
Phone Follow-Up Script:
“This is …… from Savitz Field and Focus we’re calling to confirm that you’ve received
the packet of IRS materials sent to you, answer any questions you have about the
forms and find out if you will still be participating in the upcoming focus group.”
“Thank you for your time and participation.”
7
Testing Instructions Letter
September x, 2009
Dear Jane Doe,
As we discussed in our recent phone conversation, you agreed participate in a research
study about the forms and instructions used in the IRS Offer in Compromise program.
Thank you for taking the time to contribute to this research. Your feedback will help us
revise the forms and improve taxpayers’ application experience.
This research study has two key parts: the Offer in Compromise application packet,
which you will complete on your own time, and a focus group discussion, which will be
held on ______ at ____ (see attached sheet for address and contact information).
You will use the information provided in the enclosed documents to fill out the Offer in
Compromise application. You are not expected to fill out the forms based on your own
financial situation; you’ll use information about the Wilsons, a hypothetical family
described in the enclosed documents. The application process may take some time,
and you don’t need to do it all in one sitting. As you do this research activity, please
keep in mind that we are not evaluating you or your ability to complete the forms— we
are evaluating the forms themselves.
The focus group will consist of 8-10 other individuals who also completed the
application. The group moderator will lead you and the participants through a discussion
about the process of filling out the forms, what your found confusing or helpful, etc.
Please remember to bring your completed application with you and be prepared to
share your thoughts. We are very interested in your opinion.
Your feedback is private and will be used for research purposes only. You will not be
asked to provide personal financial information, nor will we disclose your name or other
identifying information. As discussed, you will receive $____ as compensation for
participating in this study, paid to you upon completion of the focus group.
Thank you again for participating. If you have any questions about the study, feel free to
contact ______ at _____.
[Recruiter info]
Documents enclosed:
• Offer in Compromise application packet (forms and instructions)
• A written scenario (story) about the Wilsons, a hypothetical family who
would like to apply for an Offer in Compromise
• A list detailing the Wilsons’ financial background information, including
assets, income, expenses, and other information
• Stickers to indicate areas you find confusing
• A scorecard to evaluate the packet when you’re done
Offer in Compromise research study
When filling out this application, please take the approach you normally would take in a
real-life situation. For example, some people prefer to complete forms all at once, others
do it in bits and pieces; some read instructions carefully, others jump straight to the form,
etc. If you would normally ask friends or family members for help, or would search the
Internet for more information, go ahead. The only thing you may not do is call the IRS for
help. (If you have questions about this research study, feel free to contact us.)
To complete the Offer in Compromise application, please do the following:
Review the instructions and forms.
To begin, familiarize yourself with the Offer in Compromise Booklet. The booklet
introduces the Offer in Compromise program and includes the instructions and forms you
will need to complete this research activity.
Read the scenario, and imagine you are in Pamela and David Wilson’s shoes.
You will be filling out the application using the information provided about the Wilsons,
a hypothetical family. Learn about the Wilson’s situation by reading the scenario and
reviewing the list of background information.
Complete the application form as if you were a Wilson.
Fill out the application using information provided about the Wilsons in the scenario and
the list. Do the best you can; if you think a particular field is not applicable write “N/A.”
(Remember, do not include your own personal information on the forms.)
Place stickers on the application forms and instructions.
This package includes a set of red stickers. As you move through the documents, place a
sticker on any areas you find confusing.
9
Complete the scorecard.
When you finish the application, complete the scorecard provided. Remember, there are
no right or wrong answers; we simply want to know your opinion of the forms.
Bring the completed application form with you to the focus group.
Don’t forget to bring the application with you! You’ll need to turn it in to us in order to get
your compensation check.
Focus group information
The focus group will be held at [time] on [date]. Please arrive __ minutes early and call us
at _____ if anything comes up.
The address of the focus group facility is:
(To be inserted once the location is confirmed)
The Paperwork Reduction Act requires that the IRS display an OMB control number on all
public information requests. The OMB Control Number for this study is 1545-1349. Also, if
you have any comments regarding the time estimates associated with this study or
suggestions on making this process simpler, please write to the Internal Revenue Service,
Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW,
Washington, DC 20224.
Wage Earner Scenario
Imagine that you are part of a couple: Pamela Wilson, a 36‐year‐old lab technician at the
Beeler Medical Center, and David Wilson, a 38‐year‐old sales manager formerly employed
at a car dealership who now works in the stockroom at Big‐Save. You live with your two
children in a two‐story house in Pittsburgh, PA. After falling behind on your taxes in 2005
and 2006 and incurring a $22,342 tax liability, you’ve been paying your IRS debt through a
monthly installment plan. However, your family’s employment and cash flow situation has
changed, and you can no longer afford the payments. You heard that the IRS has a
program called “Offer in Compromise” which allows some taxpayers to pay off their debt for
less than the full amount owed.
Since the car dealership closed last November, your family has been struggling to make
ends meet on a single, full‐time salary and part‐time hourly wages from Big‐Save. You’ve
already cashed in your IRAs, gone through most of your savings, and now rely on credit
cards to cover your monthly expenses. What’s more, you anticipate that cash flow to get
even tighter next month when the Beeler Medical Center implements a salary cut that will
reduce all lab technicians’ salaries by 10%.
You’ve experienced other circumstances that hinder your ability to pay your tax debt. Two
years ago an elderly relative needed nursing home care, and you’ve been helping to pay the
costs. You’ve also had significant home repair costs of late. A bad thunderstorm damaged
the roof and flooded your basement in 2006, and you took out an adjustable‐rate second
mortgage to pay the $12,000 in repairs not covered by the insurance company. The
mortgage payments have skyrocketed even as the value of your home has fallen, and
though you would love to refinance your loans, you can’t find a bank willing to work with you
due to the credit crisis. You’ve even considered selling your home, but this wouldn’t help
your finances much since the amount you owe is higher than the value of the house. Even if
selling made sense, chances of finding a buyer are slim: Your neighbor’s house has been
on the market for 9 months.
You’ve tried to find creative ways to make some extra money and cut back on expenses.
For the past four months you’ve rented the second floor of your house to a nursing student,
an arrangement that brings in some extra income but also adds to your utility bills. You’ve
also started taking public transportation to work to save money, but since the lab technician
job requires driving to an off‐site lab twice a week, you still have work‐related gas and
vehicle maintenance costs.
Paying the full amount you owe the IRS within the 60 months remaining in the statute of
11
limitations is not feasible, given your family’s circumstances. A family friend has agreed to
lend you some money to help settle your tax debt; you hope that this money, in addition to
anything you else you can muster up, will be enough to make a reasonable offer.
To calculate an offer amount, complete the attached forms as instructed.
12
ess
y
ness
Scorecard
After you’re finished with the Offer in Compromise packet,
please evaluate the forms and instructions. Remember to bring
this scorecard with you to the focus group.
Circle one for each question.
strongly
agree
somewhat
agree
undecided
somewhat
disagree
strongly
disagree
The packet is well organized
It is easy for me to understand the content and
wording in the packet
The packet is visually clear
The packet helps me understand what I need to do
to apply for an Offer in Compromise
The tone of the packet is better than I expected
The packet looks better than I expected
The packet is straightforward
The packet explains what the IRS expects
applicants to do before, during and after the
application process
The typeface and type size are easy to read
The packet helps me understand what actions I
can take next
The packet helps me understand what resources
are available to me if I need help
The packet provides me factual information on
which to base my decision to apply for an Offer in
Compromise
The packet makes me feel that IRS wants me to be
well informed
13
Wage Earner Scenario
Imagine that you are part of a couple: Pamela Wilson, a 36‐year‐old lab technician at the
Beeler Medical Center, and David Wilson, a 38‐year‐old sales manager formerly employed
at a car dealership who now works in the stockroom at Big‐Save. You live with your two
children in a two‐story house in Pittsburgh, PA. After falling behind on your taxes in 2005
and 2006 and incurring a $22,342 tax liability, you’ve been paying your IRS debt through a
monthly installment plan. However, your family’s employment and cash flow situation has
changed, and you can no longer afford the payments. You heard that the IRS has a
program called “Offer in Compromise” which allows some taxpayers to pay off their debt for
less than the full amount owed.
Since the car dealership closed last November, your family has been struggling to make
ends meet on a single, full‐time salary and part‐time hourly wages from Big‐Save. You’ve
already cashed in your IRAs, gone through most of your savings, and now rely on credit
cards to cover your monthly expenses. What’s more, you anticipate that cash flow to get
even tighter next month when the Beeler Medical Center implements a salary cut that will
reduce all lab technicians’ salaries by 10%.
You’ve experienced other circumstances that hinder your ability to pay your tax debt. Two
years ago an elderly relative needed nursing home care, and you’ve been helping to pay the
costs. You’ve also had significant home repair costs of late. A bad thunderstorm damaged
the roof and flooded your basement in 2006, and you took out an adjustable‐rate second
mortgage to pay the $12,000 in repairs not covered by the insurance company. The
mortgage payments have skyrocketed even as the value of your home has fallen, and
though you would love to refinance your loans, you can’t find a bank willing to work with you
due to the credit crisis. You’ve even considered selling your home, but this wouldn’t help
your finances much since the amount you owe is higher than the value of the house. Even if
selling made sense, chances of finding a buyer are slim: Your neighbor’s house has been
on the market for 9 months.
You’ve tried to find creative ways to make some extra money and cut back on expenses.
For the past four months you’ve rented the second floor of your house to a nursing student,
an arrangement that brings in some extra income but also adds to your utility bills. You’ve
also started taking public transportation to work to save money, but since the lab technician
job requires driving to an off‐site lab twice a week, you still have work‐related gas and
vehicle maintenance costs.
Paying the full amount you owe the IRS within the 60 months remaining in the statute of
14
limitations is not feasible, given your family’s circumstances. A family friend has agreed to
lend you some money to help settle your tax debt; you hope that this money, in addition to
anything you else you can muster up, will be enough to make a reasonable offer.
To calculate an offer amount, complete the attached forms as instructed.
15
Wage Earner scenario draft
Joint tax liability: 22342
Personal information
Primary Taxpayer: Pamela Wilson
spouse: David Wilson
Home address: 334 E. Carson Street Pittsburgh,
Primary phone: 412-555-2387
Secondary phone: 412-555-9736
Dependents:
Jonathan Wilson, Age 10, son
Stacy Wilson, Age 8, daughter
Primary taxpayer stats:
SSN-704-190-9092
DOB 1/14/1973
Driver's license PA 235729
Spouse stats:
SSN-753-631-3715
DOB 9/10/1971
Driver's license PA 2876213
Employment information
Employer’s name: Beeler Medical Center
Employer address: 5520 Forbes Ave, Pittsburgh
PA 15210
Work phone: 412-834-2387
Employer allows calls at work
3 years 6 months with this employer
Occupation: Lab technician
Paid biweekly
Employer’s name: Big-Save
Employer address: 486 Summit Park Drive,
Washington, PA 15124
Work phone: 412-823-0962
Employer does not allow calls at work
5 months with this employer
Occupation: Stockroom assistant
Paid weekly
Other financial information
Is the individual a party to a lawsuit? No.
Ever filed for bankruptcy? No.
Anticipated increase/decrease in income? Yes.
you anticipate that cash flow to get even tighter
next month when the Beeler Medical Center
implements a salary cut that will reduce all lab
technicians’ salaries by 10%.
Is the individual the beneficiary of a trust, life
insurance, etc.? No.
In the past 10 years, lived outside US for more
than 6 months? No.
Personal asset information
Cash not in banking account
Personal bank accounts
Savings account BSG Bank
Checking account BSG Bank
Safe deposit box BSG Bank - value of contents
Fair market
amount (FMV)
Quick Sale Quick Sale Encumbrance IRS allowed Amount
percentage amount
(amount
deduction? available (as of
owed on loan)
July 15)
150
1.00
150
0
0
150
2,540
1,565
500
1.00
1.00
0.80
2,540
1,565
400
0
0
0
0
0
0
2,540
1,565
400
0
0.65
0
0
0
0
Investments
IRA - N/A
Available credit
Credit card: Chase MasterCard
Account number: 3123-3355-7298
16
Credit limit:
Amount owed:
Available amount:
Credit card: BSG Bank Visa
Account number: 8773-4123-9922
Credit limit:
Amount owed:
Available amount:
4000
2456
1544
12000
8821
3179
Life insurance
N/A
Real estate
Real estate: 334 E. Carson Street home
Fair market
amount (FMV)
Quick Sale Quick Sale Encumbrance IRS allowed Amount
percentage amount
(amount
deduction? available (as of
owed on loan)
July 15)
210,000
0.80
168,000
215,620
0
0
2002 Honda motorcycle
Mileage: 40,764
Purchase date: 12/20/2004 (bought cash)
Current FMV: $5000
Current loan balance: 0
Date of final payment: 12/20/2004
5,000
0.80
4,000
0
0
4,000 rely on this vehicle for
work
2006 Toyota Camry
Lender address: Pittsburgh Toyota, 630 Baum
Blvd, Pittsburgh, PA 15230
Lender phone: 412-622-1460
Loan start date: 9/15/2007
Loan end date: 9/15/2011
8,800
0.80
7,040
5,460
0
1,580 rely on this vehicle for
work
475
9,600
0.80
0.80
380
7,680
0
0
0
8,230
Vehicles
Personal assets
Valuable items: Stamp collection
Furniture and personal effects
380
0
Available income
Primary taxpayer (Pamela)
Spouse (David)
Interest/Dividends
Net business income
Net rental income
Distributions
Pensions/social security (taxpayer)
Pensions/social security (spouse)
Child support
Alimony
Other
Average monthly expenses
Food, clothing, miscellaneous
Housing and utilities
Vehicle ownership
Vehicle operating
Public transportation
Health insurance
Out-of-pocket health
Court-ordered payments
Childcare
Life insurance
Taxes
Other
Funds you can borrow from friend (Joanna
Stevens)
Joint tax liability:
2,859
1,120
0
0
500
0
0
0
0
0
0
IRS allowed
expense
amounts
1,370
1,572
489
186
60
0
240
0
0
0
0
0
national
Allegheny county
national
Midwest region -Cleveland
Actual gross
monthly
expenses
1,140
1,620
250
335
60
125
385
0
125
0
720
140
5,000
22,342
17
IRS
Department of the Treasury
Internal Revenue Service
www.irs.gov
Form 656-B (03-2009)
Catalog Number 52133W
Form 656-B
Offer in
Compromise
Booklet
IMPORTANT! THIS BOOKLET CONTAINS INFORMATION AND FORMS THAT
YOU NEED IN ORDER TO PREPARE A COMPLETE AND ACCURATE OFFER IN
COMPROMISE. PLEASE READ THESE INSTRUCTIONS CAREFULLY BEFORE
ATTEMPTING TO COMPLETE THE ENCLOSED FORMS.
CONTENTS
■
What is an Offer in Compromise? ............................................................... 1
■
Step One: Is Your Offer in Compromise “Processable”? ................................. 2
■
Step Two: What We Need to Fully Evaluate Your Offer ....................................... 3
■
Step Three: Determining the Amount of Your Offer .................................. 6
■
Step Four: Offer in Compromise Application Fee and Payments ........... 12
■
Step Five: Where to Send Your Offer ...................................................... 14
■
Step Six: What to Expect After the IRS Receives Your Offer .................. 15
■
Step Seven: Offer in Compromise Summary Checklist .......................... 17
■
Important Information You Need To Know Regarding the
Offer in Compromise ............................................................................... 18
■
Terms and Definitions.............................................................................. 19
■
Step Eight: Completing Form 656, Offer in Compromise ....................... 20
■
Removable Forms – Form 656, Offer in Compromise Application Fee
and Payment Worksheet, Form 656-A, Form 656 - PPV, Form 433-A,
and Form 433-B, ..................................................................................... 23
Note: If you have any questions, please call our toll-free number at 1-800-829-1040. You can get
forms and publications by calling toll free at 1-800-829-3676 (1-800-TAX-FORM), or by visiting
your local Internal Revenue Service (IRS) office or our web site at www.irs.gov.
18
Funding Your Offer
If you do not have the cash to pay your
offer amount immediately, you should
begin the process of exploring options
to finance your offer amount. Options
you may want to consider include
liquidating assets, obtaining a loan
from a lending institution, borrowing
on your home equity through a second
mortgage or reverse mortgage, or
borrowing funds from family members
or friends.
NOTE: If your offer is returned or
not accepted, any required
payment made with the
filing of your offer will not
be refunded. Your payment
will be applied to your
outstanding tax liabilities.
8
19
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20
What is an
Offer in Compromise?
An Offer in Compromise (OIC) is an
agreement between the taxpayer and
the government that settles a tax
liability for payment of less than the
full amount owed.
The IRS will generally accept an Offer
in Compromise when it is unlikely that
the tax liability can be collected in full
and the amount offered reasonably
reflects collection potential. An OIC is
a legitimate alternative to declaring a
case currently not collectible or to a
protracted installment agreement. The
goal is to achieve collection of what
is potentially collectible at the earliest
possible time and at the least cost to the
government.
The success of the Offer in Compromise
program will be assured only if taxpayers
make adequate compromise proposals
consistent with their ability to pay and
the Service makes prompt and reason
able decisions. Taxpayers are expected
to provide reasonable documentation
to verify their ability to pay. The ultimate
goal is a compromise which is in the
best interest of both the taxpayer and
the Service. Acceptance of an adequate
offer will also result in creating a fresh
start for the taxpayer and an expectation
of compliance with all future filing and
payment requirements.
n Doubt as to Collectibility. This
means that doubt exists that the
taxpayer could ever pay the full
amount of tax liability owed within
the remainder of the statutory period
for collection. The IRS will consider
a doubt as to collectibility offer
when the taxpayer is unable to pay
the taxes in full either by liquidating
assets or through current installment
agreement guidelines. The taxpayer
must submit the appropriate collec
tion information statement along with
all required supporting documents.
n Doubt as to Liability. This means
that a legitimate doubt exists that
the taxpayer owes part or all of the
1
assessed tax liability. To submit a
Doubt as to Liability OIC, the taxpayer
must submit Form 656-L, which can
be obtained by calling the toll free
number 1-800-829-1040, by visiting
the local IRS office or our web site at
www.irs.gov.
n Effective Tax Administration (ETA).
This means that the taxpayer does
not have any doubt that the tax is
correct and there is potential to collect
the full amount of the tax owed, but an
exceptional circumstance exists that
would allow the Service to consider
an offer. To be eligible for compromise
on this basis, a taxpayer must demon
strate that collection of the tax would
create an economic hardship or would
be unfair and inequitable. For an ETA
offer, a taxpayer must submit:
1. A collection information statement
with all appropriate attachments,
and
2. A written narrative explaining the
taxpayer’s special circumstances
and why paying the tax liability
in full would create an economic
hardship or would be unfair and
inequitable.
The taxpayer must also attach appro
priate documentation that will support
their request for an ETA offer such as
proof of unusual expenses that would
cause an economic hardship if the
taxes were collected in full.
Note: An important factor in determining
the type of offer to submit is the potential
ability to pay the liability in full. If the
taxpayer cannot pay their liability in full,
then they should submit a Doubt as
to Collectibility offer. If special circum
stances exist, see Page 6 for additional
information. However, if potential exists
to pay their liability in full, but the collec
tion of the tax would create an economic
hardship or would be unfair or inequi
table, then they should submit an Effec
tive Tax Administration (ETA) offer.
21
STOP
PLEASE DO NOT GO ANY FURTHER WITHOUT FIRST DETERMINING WHETHER OR
NOT YOU ARE ELIGIBLE TO HAVE YOUR OFFER IN COMPROMISE PROCESSED AT
THIS TIME.
Step One:
Please answer the three questions below to determine if you are eligible to have your Offer in Compromise
processed.
YES
NO
1. Do you currently have an open bankruptcy proceeding? You should contact your Bankruptcy
Attorney if you are not certain. If you are involved in an open bankruptcy proceeding, contact
your local IRS Insolvency office. If you do not know the location of your local IRS Insolvency
office, then you may call 1-800-829-1040. They will be able to provide you with the local number.
Any resolution of your outstanding tax liabilities generally must take place within the context of
your bankruptcy proceeding. If you answered YES to this question, then stop here. You are not
eligible to have your offer considered or processed at this time.
2. Offer in Compromise Application Fee — Your offer must include the $150 application fee or
a completed Form 656-A, Income Certification for Offer in Compromise Application Fee and
Payment, if you are requesting an exception of the fee because of your income. Offers received
without the $150 fee or a completed Form 656-A will not be accepted for processing. Please see
Step Four on Page 12 of this package for more information on the application fee and to deter
mine if you qualify for the exception.
Have you attached the $150 application fee or the Form 656-A, whichever is applicable, to the
Form 656? If you answered NO to this question, Stop Here. You are not eligible to have your
offer considered or processed at this time.
3. Cash Payment and Periodic Payment Offers — Your offer must include your 20% payment
for Lump Sum Cash payment offers, or your first installment payment of your Periodic Payment
offer (Short Term or Deferred). If you are requesting an exception to the 20% down payment or
your initial periodic payment because of your income level, then you must complete Form 656-A,
Certification of Offer in Compromise Application Fee and Payment. Offers received without one of
these will not be accepted for processing. Please see Step Four on Page 12 of this package for
more information on the Cash Payment and Periodic Payment Offer.
Have you attached either the 20% payment for Lump Sum Cash payment offers or your first
installment payment for a Periodic Payment Offer, or, the Form 656-A? If you answered NO to
this question, Stop Here. You are not eligible to have your offer considered or processed at this
time.
NOTE: If you currently have an approved installment agreement with IRS and are currently making
installment payments to IRS, then you may stop making those installment agreement payments
when you submit a Periodic Payment offer. This will allow you to make your payments required
under the Periodic Payment guidelines. You do not have to make both installment agreement
payments and periodic payments at the same time.
However this procedure does not apply to Lump Sum Cash Offers. If you submit a Lump
Sum Cash offer and you are currently making installment agreement payments, then you must
continue to make your installment agreement payments until your offer is accepted.
2
22
Step Two: What We Need to Fully Evaluate
Your Offer
1. You must file all tax returns that
you were legally required to file
prior to submitting an Offer in
Compromise. If you have not filed all
required tax returns, you will be asked
to do so before we begin to evaluate
your offer.
This includes but is not limited to:
n All Income Tax, Employment Tax,
and Excise Tax returns, along with
all returns required to be filed by
Partnerships, Limited Liability
Companies, or closely held SubChapter S Corporations.
If you did not file a return for a
specific year prior to submitting your
OIC because you were not legally
required to file the return, then you
must include a detailed explanation
of your circumstances with your OIC.
If you used an employee leasing
company for all or part of the time
during the past three years, then
please provide a detailed explanation
of your circumstances with your offer
by providing the exact dates you
used the employee leasing company,
the name and address of the leasing
company, and EIN of the leasing
company, and whether or not you are
still using them.
2. If you are a business with
employees, then you must have
made all required federal tax
deposits for the current quarter. If
you have not made all the required
deposits, you will be asked to do
so before we begin to evaluate your
offer. In addition, you must remain
current on all filing and deposit
requirements while your offer is being
investigated.
3. Estimated tax payments must be
up to date for the current year —
We will not process your offer to
completion if we determine that
your estimated tax payments for the
current year’s income tax liability are
not paid up to date. If we determine
3
this to be the case, you will have one
opportunity to make the required
payments before we return your offer.
NOTE: If you fail to comply with
items 1, 2, or 3, then your offer will
be returned to you and we will keep
your $150 application fee as well as
any payments you made with your
offer, such as the 20% payment or
your first installment. Any money
not returned will be applied to your
tax liability.
4. Complete an accurate
Form 656 — Complete all applicable
items on Form 656, which is the
official compromise agreement.
You must sign Form 656. If someone
else prepared the offer package, then
please see the instructions in Step
Eight, Section IX and X, found on
Page 21 of this package. If your Form
656 was prepared by an authorized
representative, you must include
a completed Form 2848, Power
of Attorney and Declaration of
Representative, with your offer, unless
a copy is already on file with the IRS
Detailed instructions for the comple
tion of Form 656 are found on Pages
20 – 22 of this package.
Common errors to avoid in
completing Form 656:
n The taxpayer’s name is missing.
n The street address is missing or
incomplete.
n The social security number (SSN)
or employer identification number
(EIN) is missing, incomplete, or
incorrect.
n The preprinted terms and condi
tions listed on the Form 656 have
been altered or deleted.
n An offer amount is missing.
n Payment terms are missing or
terms do not equal the offer
amount.
n A required signature is missing.
23
5. Complete an accurate collection
information statement (Form 433-A
and/or Form 433-B) — You must
provide financial information when
you submit offers based on doubt
as to collectibility and effective tax
administration. You must send us
current information that reflects
your financial situation for the three
months immediately prior to the
date you submitted your Offer in
Compromise. Collection information
statements must show all assets and
income. The offer investigator needs
this information to evaluate your offer
and may ask you to update it or verify
certain financial information. These
forms must be filled in completely.
We may return offer packages that
are incomplete. Annotate items that
do not apply to you with “N/A.”
Provide all the information required
to support your financial condition.
Required items of documentation are
clearly indicated on the collection
information statements
under the signature blocks. Photo
copies of these support documents
are acceptable. If you mail your
original documents to the IRS, they
will not be returned to you unless you
specifically request it.
When only one spouse has a tax
liability but both have incomes, only
the spouse responsible for the tax
debt is required to sign the necessary
collection information statements.
The responsible spouse should
include only his/her assets and
liabilities on his/her collection
information statements. However,
the income and expenses of the
entire household is required on
the responsible spouse’s collec
tion information statements. The
entire household includes spouse,
domestic partner, significant other,
children, and others that contribute
to the household. This is necessary
for the IRS to evaluate the income
4
and expenses allocable to the liable
taxpayer.
When both spouses have tax liabili
ties included in the offer, whether
jointly or separately, and they
maintain a household together, both
spouses are required to sign the
collection information statement and
include income and expenses of the
entire household.
In states with community property
laws, we require collection informa
tion statements from both spouses.
We may also require financial infor
mation on the non-liable spouse, or
cohabitant(s), for offer verification
purposes, even when community
property laws do not apply.
6. Respond promptly to requests for
additional information — While we
are evaluating your offer, we may
contact you for any information that
is missing or requires clarification.
You must respond within the time
frame given to you by IRS or, we
will not give your offer any further
consideration. Your offer will be
returned to you and we will keep
your $150 application fee as well as
any payments you made with your
offer such as the 20% payment or
your first installment. Any money
not returned will be applied to your
tax liability.
7. We will not consider offers where
liabilities have not been assessed
— You cannot submit an offer that is
solely for a tax year or tax period that
has not been assessed. Your offer
will be returned if you submit an offer
that is solely for an unassessed tax
year or tax period and you will forfeit
your application fee. Any money not
returned will be applied to your tax
liability.
8. Trust fund taxes - Offers, from
businesses seeking to compromise
unpaid trust fund taxes that are
24
subject to assertion of the trust fund
recovery penalty, will not be evalu
ated until the trust fund portion of
the liability is either fully paid or the
trust fund recovery penalty has been
assessed against the responsible
persons.
9. Make copies of removable forms
and documents — This is a reminder
that you should make copies of all
the removable forms and documents
that you send to the IRS. You should
keep these copies with your records.
5
25
Step Three: Determining the Amount of
Your Offer
Doubt as to Collectibility
Your offer amount must equal or
exceed your reasonable collection
potential amount. The information
provided on the collection information
statements (Form 433-A and Form
433-B) assists us in determining the
reasonable collection potential (RCP).
The RCP equals the net equity of
your assets plus the amount we could
collect from your future income. If our
financial analysis indicates that you
have the ability to fully pay the tax
liability, either immediately or through
an installment agreement, your offer
will be rejected. Exception: special
circumstances. Please see below
for more information on special
circumstances. You must offer an
amount greater than or equal to the
RCP amount. All offer amounts must
exceed zero.
If special circumstances cause you to
offer an amount less than the RCP, you
must complete Section VI, “Explana
tion of Circumstances,” on Form 656,
explaining your situation. You must
also attach to Form 656 any supporting
documents to help support your special
circumstances. Special circumstances
6
may include factors such as advanced
age, serious illness from which recovery
is unlikely, or any other factors that have
an impact upon your ability to pay the
total RCP and continue to provide for the
necessary living expenses for you and
your family.
If you are a wage earner or selfemployed individual, completion of the
worksheet on Pages 9 - 11 will give you
a good estimate of what an accept
able offer amount may be. You will use
the information on your Form 433-A to
complete the worksheet.
Effective Tax Administration (ETA)
Complete Form 433-A or Form 433-B,
as appropriate, and attach to Form 656.
You must complete Section VI, “Expla
nation of Circumstances,” on Form 656,
explaining your exceptional circum
stances and why requiring payment of
the tax liability in full would either create
an economic hardship or would be unfair
and inequitable. You must also attach
to Form 656 any documents to help
support your exceptional circumstances.
26
Determine Your
Payment Terms
There are three payment plans you and
the IRS may agree to:
n Lump Sum Cash Offer – This option
requires the offer amount to be paid
in five or fewer installments, upon
written notice of acceptance. Twenty
percent of the total amount of the
offer must be paid when you submit
the Form 656.
If these installments will be paid in five
months or less, you should offer the
realizable value of your assets plus the
total amount we could collect over 48
months of payments (or the remainder
of the statutory period for collection,
whichever is less).
If these installments will be paid in
more than five months, but less than
24 months you should offer the realiz
able value of your assets plus the
total amount we could collect over 60
months of payments.
If these installments will be paid in
more than 24 months, you should
offer the realizable value of our assets
plus the number of months remaining
on the statutory period for collection.
n Short Term Periodic Payment
Offer – This option requires the offer
amount to be paid within 24 months
from the date IRS received the offer.
The first payment must be submitted
with your Form 656. You must
continue to make regular payments
during your offer investigation. Failure
to make regular payments during your
offer investigation will cause your offer
to be withdrawn.
The offer must include the realizable
value of your assets plus any amount
we could collect over 60 months of
payments (or the remainder of the
statutory period of collection, which
ever is less.)
NOTE: Generally the collection
statute is 10 years from the date
that your liability was assessed. If
7
you need assistance in calculating
the remaining time on your collec
tions statute, call 1-800-829-1040.
n Deferred Periodic Payment Offer –
This option requires you to pay the
offer amount over the remaining statu
tory period for collecting the tax. This
offer option must include the realizable
value of your assets plus the amount
we could collect through monthly
payments during the remaining life of
the collection statute. As with the Short
Term Periodic Payment above, the
first payment must be submitted with
your Form 656. You must make regular
payments during your offer investiga
tion. Failure to make regular payments
during your offer investigation will
cause your offer to be withdrawn.
Use the worksheet on pages 9 - 11,
and use the amount in Box P as the
basis for your offer amount in Section
IV of Form 656.
n Notice of Federal Tax Lien – We may
file a Notice of Federal Tax Lien with
any of the above payment options.
n How to Calculate an Offer Amount
– The worksheet on pages 9 - 11
instructs wage earners and selfemployed individuals how to figure
the appropriate amount of Lump Sum
Cash, Short Term Periodic Payment
and Deferred Periodic Payment Offers.
n Exception to Application Fee and
Payments – If you believe that you
qualify for the exception to the $150
application fee and payments due to
your low income, then please complete
the Offer in Compromise Applica
tion Fee and Payment Worksheet.
If you meet the qualifications, then
you are not required to make any
payments while we investigate your
offer. Complete Form 656-A, Income
Certification for Offer in Compromise
Application Fee and Payment, and
submit it with Form 656.
27
Keep this worksheet for your records.
Do not send to the IRS.
Worksheet to Calculate an Offer Amount
For use by Wage Earners and Self-Employed Individuals
Use this Worksheet
to calculate an
offer amount using
information from
the 433-A
A
1.
Enter total Cash balances from lines 11 and 56
2.
Enter total Personal and Business account balances from lines 12c and 57c
B
If less than 0, enter 0
C
3.
Enter total investments from line 13d
4.
Enter total life insurance cash value from line 15g
D
r
o
f
s
i
s
h
d
t
r
p
o
e
c
e
e
K ur r
o
y
5.
Enter total accounts/notes receivable from line 58e
Subtotal: Add boxes A through E =
6.
E
F
Real Property Owned
Enter Fair Market Value (FMV)
for each asset
Enter loan balance
for each asset
Individual asset
value (if less
than 0, enter 0)
From line 17a $_____________x .8 = $_______________- $_____________ =
_____________
From line 17b $_____________x .8 = $_______________- $_____________ =
_____________
Amount from any attachments
$_____________x .8 = $_______________- $_____________ =
_____________
Subtotal =
7. Purchased Personal Vehicles and Other Licensed Assets
Enter FMV
for each asset
Enter loan balance
for each asset
G
Individual asset
value (if less
than 0, enter 0)
From line 18a $_____________x .8 = $_______________- $_____________ =
_____________
From line 18b $_____________x .8 = $_______________- $_____________ =
_____________
Amount from any attachments
$_____________x .8 = $_______________- $_____________ =
_____________
Subtotal =
8. Personal Assets Except Furniture and Personal Effects
Enter FMV
for each asset
Enter loan balance
for each asset
H
Individual asset
value (if less
than 0, enter 0)
From line 19a $_____________x .8 = $_______________- $_____________ =
_____________
From line 19b $_____________x .8 = $_______________- $_____________ =
_____________
Amount from any attachments
$_____________x .8 = $_______________- $_____________ =
_____________
Subtotal =
9
I
28
9. Furniture and Personal Effects
$_____________x .8 = $_______________- $_____________ =
Allowable Exemption (subtract) –
Subtotal =
Cannot be less than 0
10. Business Assets Except Books and Tools
_____________
$7900.00
J
Individual asset
value (if less
than 0, enter 0)
r
o
f
s
i
s
h
d
t
r
p
o
e
c
e
e
r
K ur
o
y
Enter current value
for each asset
Enter loan balance
for each asset
From line 59a $_____________x .8 = $_______________- $_____________ =
_____________
From line 59b $_____________x .8 = $_______________- $_____________ =
_____________
Amounts from any attachments
$_____________x .8 = $_______________- $_____________ =
____________
Subtotal =
11. Books and Tools
$_____________x .8 = $_______________- $_____________ =
Allowable Exemption (subtract) –
Subtotal =
Cannot be less than 0
12. Add amounts in Boxes F through L to obtain your total equity and assets =
13. Enter amount from line 32
$________________
Enter amount from line 45 and subtract –
Net Difference
This amount would be available
to pay monthly on your tax liability.
10
$________________
=
N
K
_____________
$3950.00
L
M
If Box N is 0 or less,
STOP. Use the amount
from Box M to base
your offer amount in
Section IV of Form 656.
Your offer amount
must equal or exceed
the amount shown in
Box M.
29
14. Select the payment term below that you have chosen for your offer. For more information on
payment terms, please see page 7 of this booklet.
A. Lump Sum Cash paid 5 installments
within 5 months or less (or the
remainder of the statutory period for
collection, whichever is less)
Amount from Box N
B. Lump Sum Cash paid 5 installments
in more than 5 months but less
than 24 months (or the remainder
of the statutory period for collection,
whichever is less)
Amount from Box N
C. Lump Sum Cash paid 5 installments
in more than 24 months
Amount from Box N
X
48
=
$_______________
X
r
o
f
s
i
s
h
d
t
r
p
o
e
c
e
e
K ur r
o
y
D. Short Term Periodic Payment paid
within 6 – 24 months
60
X
The number of months
remaining on the
statutory period for
collection ____
=
$_______________
X
=
$_______________
Amount from Box N
X
The number of months
remaining on the
statutory period for
collection ____
=
Insert in Box O the amount from the payment terms you chose
above.
Add Boxes M $_________________ +
O $_________________
$_______________
Amount from Box N
60
E. Deferred Periodic Payment paid
within the remainder of the statutory
period for collection.
=
$_______________
O
$_______________
P
=
$_______________
Enter the amount in Box P as your minimum offer amount in Section IV on the Form 656
Note: If you are submitting an offer under effective tax administration or doubt as to collectibility with special circumstances
considerations then refer to page 6 of this booklet.
By law, the IRS has the authority to collect outstanding federal taxes for ten years from the date your liability is assessed.
There may be circumstances that extend the ten year collection statute such as when a taxpayer files bankruptcy or an Offer
in Compromise.
The IRS may adjust the Reasonable Collection Potential (RCP) during the investigation to a higher or lower amount,
depending upon the facts and circumstances of your individual case. Occasionally, the IRS updates the amounts
allowed for exempt property (i.e., Line 9, Furniture and Personal Effects, and Item 11, Books and Tools). Please
use the amounts listed on page 10 ($7900 and $3950, respectively) until this booklet is revised again, or you can
call our toll-free number (1-800-829-1040) to confirm the current amounts.
You can call the toll free number 1-800-829-1040 for assistance in calculating the remaining time on your
collection statute.
11
30
Step Four: Offer in Compromise Application Fee and
Payments
One person
is liable
Two people
are liable
for one joint
liability
Two people
have joint
liabilities but
want to file
separate
offers
Two people
have joint
liabilities and
one has joint
and separate
liabilities
Corporation
has a liability
Partnership
has a liability
Individual
and Corpo
rate or
Partnership
liabilities
1
1
2
2
1
1
2
Each will
show the
joint liabilities
One with
the joint and
the 2nd with
the joint and
separate
liabilities
Number of
Forms 656
required
Number of
fees to be
sent with the
Form 656*
1 - $150 fee
1 - $150
2 - $150
2 - $150
1 - $150
1 - $150
2 - $150
Lump Sum
Cash Offer
amount to be
sent with the
Form 656
20% of the
amount
offered
20% of the
amount
offered
20% for
each offered
amount
20% for
each offered
amount
20% of the
amount
offered
20% of the
amount
offered
20% for
each offered
amount
First
payment
amount
shown in
Section IV of
the Form 656
First
payment
amount
shown in
Section IV of
the Form 656
First
payment for
each offer
that is shown
in Section IV
of the Form
656
First
payment for
each offer
that is shown
in Section IV
of the Form
656
First
payment
amount
shown in
Section IV of
the Form 656
First
payment
amount
shown in
Section IV of
the Form 656
First
payment
for each
offer that is
shown in
Section IV of
the Form 656
Amount
to be sent
with the
Short Term
or Deferred
Periodic
Payment
Offer
A. The application fee and payment are due on all offers at the time you submit your offer. Please staple
both the application fee and payment to the front of your Form 656. Any offer submitted without the
application and payment will be returned to you without further consideration.
* EXCEPTION: If you certify that your total monthly household income is at or below levels based
on the IRS OIC Low Income Guidelines, then you may be exempt from the application fee and the
payments (20% of the amount offered, the initial payment, and required payments while your offer
is being investigated) as described above. The exception for taxpayers with incomes below these
levels only applies to individuals. It does not apply to other entities such as corporations, partner
ships, and LLC’s.
To determine if you qualify for the exemption, please complete the attached Offer in Compro
mise Application Fee and Payment Worksheet. If you do qualify, then you must complete and sign
Form 656-A.
B. Do not send cash. Please make all checks or money orders payable to the “United States Treasury”.
C. The application fee can only be returned to you if the IRS determines that your offer is not processable. If your offer is determined to be not processable (see Page 2 for the 3 processable require
ments), the IRS will return your application fee.
12
31
However if your offer is determined to be not processable and you have made either the 20%
initial payment for Lump Sum Cash offer, or the first initial installment for the Short Term Periodic
Payment Offer or Deferred Periodic Payment Offer, these payments will not be refunded to you.
They will be applied to your outstanding tax liability and your offer will be returned to you as not
processable.
D. If your offer is determined to be processable and later in the investigation, the offer is returned,
rejected, or withdrawn, the application fee and payments will be applied to your outstanding
tax liability.
E. If you have any additional questions about your Offer in Compromise, application fee or
payments, please call toll free at 1-800-829-1040, visit our web site at www.irs.gov or visit your
nearest IRS office. You will find the exact address in your local phone book under U.S. Govern
ment.
13
32
Step Five: Where You Need to Send Your Offer
Where to File
IF YOU RESIDE IN
Alaska, Alabama, Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana,
Mississippi, Montana, Nevada, New Mexico, Oregon, Tennessee, Texas, Utah,
Washington, Wisconsin or Wyoming,
AND
AND
You are a wage earner, retiree, or a
self-employed individual without
employees,
You are OTHER than a wage earner,
retiree, or a self-employed individual
without employees,
THEN MAIL
THEN MAIL
Form 656 and attachments to:
Form 656 and attachments to:
Memphis Internal Revenue Service
Center COIC Unit
PO Box 30803, AMC
Memphis, TN 38130-0803
Memphis Internal Revenue Service
Center COIC Unit
PO Box 30804, AMC
Memphis, TN 38130-0804
IF YOU RESIDE IN
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,
AND
AND
You are a wage earner, retiree, or a
self-employed individual without
employees,
You are OTHER than a wage earner,
retiree, or a self-employed individual
without employees,
THEN MAIL
THEN MAIL
Form 656 and attachments to:
Brookhaven Internal Revenue Service
Center COIC Unit
PO Box 9007
Holtsville, NY 11742-9007
Form 656 and attachments to:
Brookhaven Internal Revenue Service
Center COIC Unit
PO Box 9008
Holtsville, NY 11742-9008
14
33
Step Six:
What to Expect After the IRS Receives
Your Offer
How We Consider
Your Offer
An offer examiner will evaluate your offer
and may request additional documentation
from you to verify financial or other
information you provide. The examiner will
then make a recommendation to accept or
reject the offer. The examiner may also
return your offer if you do not provide
the requested information. The examiner
may decide that a larger offer amount is
necessary to justify acceptance. You will
have the opportunity to amend your offer.
Additional
Agreements
When you submit certain offers, we may
also request that you sign an additional
agreement requiring you to:
■ Pay a percentage of your future
earnings.
There are certain circumstances where
we will withhold collection activities while
we consider your offer. We will not act to
collect the tax liability:
■ While you appeal an offer rejection.
Withholding
Collection
Activities
■ While we investigate and evaluate your
offer.
■ For 30 days after we reject an offer.
Periodic Payments
Requirements
If you choose one of the Periodic Payment
options, then you are required to continue
to make payments while your offer is being
investigated. The removable Form 656
PPV is to be used to make these periodic
payments. The instructions to complete
Form 656-PPV are contained on the form
as well as the proper address to mail your
payments to. It is important to note that
■ Waive certain present or future tax
benefits.
The above do not apply if we find any
indication that you submitted your offer to
delay collection or cause a delay which will
jeopardize our ability to collect the tax.
■ A Notice of Federal Tax
Lien may be filed at any time while
your offer is being considered
the address where you send your periodic
payments is different from the address
where you submit your offer form. Be
sure you send your periodic payment and
Form 656-PPV to the address listed on the
Form 656-PPV, as it applies to where you
originally filed your offer.
NOTE: Step Six continues on Page 16.
15
34
If We Accept
Your Offer
If we accept your offer, we will notify you
by mail. When you receive your acceptance
letter, you must:
■ Promptly pay any unpaid amounts
that become due under the terms of
the offer agreement. You must comply
with the payment terms specified in the
agreement in a timely manner or your
offer and agreement will be in default.
■ Comply with all the terms and conditions
of the offer, along with those of any
additional agreement.
■ Promptly notify us of any change of
address until you meet the conditions
of your offer. Your acceptance letter
will indicate the IRS office to contact if
your address changes. Your notification
allows us to contact you immediately
regarding the status of your offer.
We will release all Notices of Federal Tax
Lien when you satisfy the payment terms
of the offered amount. For an immediate
release of a lien, you can submit certified
funds with a request letter to the address
on the acceptance letter.
Once your offer is accepted, not filing
returns or paying taxes when due could
result in the default of an accepted offer
(see Section V (d) of Form 656 for the
If We Reject Your
Offer
future compliance provision). If you default
your agreement, we will reinstate the
unpaid amount of the original tax liability,
file a Notice of Federal Tax Lien on any tax
liability without a filed notice, and resume
collection activities. The future compliance
provision applies to all offers based on
Doubt as to Collectibility and Effective
Tax Administration offers.
We will not default your offer agreement
when you have filed a joint offer with your
spouse or ex-spouse as long as you have
kept or are keeping all the terms of the
agreement, even if your spouse or exspouse violates the future compliance
provision.
The offer agreement requires you to
forego certain refunds, and to return those
refunds to us if they are issued to you by
mistake. These conditions are also listed
on Form 656, Sections V (f) and (g). For
example, if your offer was accepted by the
IRS in the tax year 2008, the IRS would
keep the refund due to you with respect
to the tax year 2008, which you would
normally receive in calendar year 2009
(because the due date for filing the tax year
2008 is April 15, 2009).
■ Information about appeals, including
We will notify you by mail if we reject
your offer. In our letter, we will explain our
an online self-help tool to assist you
reason for the rejection. We will also keep
in deciding whether to appeal the
your $150 application fee and payments.
rejection of your offer, is available
If your offer is rejected, you have the
at www.irs.gov, using key word
right to:
“appeals”.
■ Appeal our decision to the Office of
Appeals within thirty days from the
date of our letter. The letter will include
detailed instructions on how
to appeal the rejection.
16
35
Step Seven: Offer in Compromise Summary Checklist
Below is a checklist of items that you should review and complete prior to submitting
your Form 656, Offer in Compromise. This checklist is solely for your benefit, so do not
submit with your offer.
❏
Did you answer YES to question one
on Page 2? If you did, then please
do not submit Form 656 because
you are not eligible to have your offer
considered at this time.
❏
Did you answer NO to questions
two or three on Page 2? If you did,
then please do not submit Form 656
because you are not eligible to have
your offer considered at this time.
❏
Have you properly completed
Form 656, Offer in Compromise,
by following the instructions on
Pages 20 - 22?
❏
Are the preprinted terms and
conditions listed on Form 656
unaltered?
❏
Are you using the most current
versions of Form 656, Form 433-A,
and Form 433-B as instructed on
Page 4?
❏
Have you included complete financial
information (Form 433-A or Form
433-B, or both) and all attachments
as instructed on Page 4?
❏
Have you either attached the
application fee in the designated
area on the Form 656 or attached
the Form 656-A certification,
whichever is applicable?
❏
Have you attached to Form 656 either
the 20% payment for the Lump Sum
Cash offer, or the first installment
payment for either the Short Term
Periodic Payment or Deferred
Periodic Payment, OR attached Form
656-A certification, whichever is
applicable?
❏
Have you signed in all required places
on Form 433-A and /or Form 433-B?
❏
Is your offer amount greater than
or equal to the reasonable collection
potential (RCP) as described on
Page 6 and calculated on Page 11,
unless your offer is based on Effective
Tax Administration and/or special
circumstances exist?
❏
Did you include your name (or names,
if joint)?
❏
Have you included your social
security number (SSN) (both SSNs
are required if filing a joint offer) and/
or employer identification number
(EIN) and is it accurate?
❏
If applicable, are Sections IX and XI,
on Form 656 completed?
Have you included an offer amount
(the amount must be greater
than zero) and payment terms as
instructed on Page 11, Box P?
❏
If applicable, is Section X on Form
656 completed and signed?
❏
Have you properly identified where
to mail your Form 656 from the
instructions on Page 14?
❏
❏
Have you signed the Form 656? If
this is a joint Form 656, have both
spouses signed Form 656?
❏ If applicable, did you attach Form
2848 as required in Section Xl, Page
22?
If you have any questions, please call our toll-free number at 1–800–829–1040. You
can get forms and publications by calling toll free at 1–800–829–3676
(1–800–TAX–FORM), or by visiting your local Internal Revenue Service (IRS)
office or our website at www.irs.gov.
17
36
Important Information Regarding the
Offer in Compromise
Statute of Limitations for Assessment
and Collection is Suspended — The
statute of limitations for assessment and
collection of a tax debt is suspended
while an OIC is “pending,” or being
reviewed. The Offer in Compromise is
pending starting with the date an
authorized IRS employee determines the
Form 656 can be processed and signs
the Form 656. The OIC remains pending
until an authorized IRS employee ac
cepts, rejects, returns, or acknowledges
withdrawal of the offer in writing. If a tax
payer appeals an OIC that was rejected,
the IRS will continue to treat the OIC as
pending until the Appeals Office accepts
or rejects the OIC in writing.
Taxpayers Must File and Pay Taxes —
In order to avoid defaulting an OIC once
it is accepted by the IRS, taxpayers must
remain in compliance in the filing and
payment of all required taxes for a period
of five years, or until the offered amount
is paid in full, whichever is longer. Failure
to comply with these conditions will result
in the default of the OIC and the rein
statement of the full tax liability.
Federal Tax Liens Are Not Released —
If there is a Notice of Federal Tax Lien on
record prior to the OIC being submitted,
the lien is not released until the terms of the
offer in compromise are satisfied, or until
the liability is paid, whichever comes first.
The IRS generally files a Notice of Federal
Tax Lien to protect the Government’s inter
est on all payment offers. This tax lien will
be released when the payment terms of the
offer agreement have been satisfied.
Effect of the Offer on the Taxpayer’s
Refund — The IRS will keep any refund,
including interest due to the taxpayer be
cause of overpayment of any tax or other
liability, for tax periods extending through
the calendar year that the IRS accepts
the offer. The taxpayer may not desig
nate an overpayment ordinarily subject to
refund, to which the IRS is entitled, to be
applied to estimated tax payments for the
following year.
Effect of the Offer on Levies — The IRS
will keep all payments and credits made,
received or applied to the total original
18
tax liability before submission of this offer.
The IRS may keep any proceeds from
a levy served prior to submission of the
offer, but not received at the time the offer
is submitted. If a levy has been served
prior to submission of the offer, or if a levy
was served after the offer was filed, then
immediately contact the IRS person or
function whose name and phone number
appear on the levy as the contact person.
Public Inspection Files for Accepted
Offer in Compromise Files — The law
requires IRS to make certain information
from accepted Offers in Compromise
available for public inspection and review.
These public inspection files are located
in designated IRS Area Offices. It is im
portant to know that certain information
regarding your accepted Offer in Compro
mise will be publicly known.
Taxpayer Advocate Service — The
Taxpayer Advocate Service (TAS) is an
independent organization within the IRS
whose employees assist taxpayers who
are experiencing harm, who are seeking
help in resolving tax problems that have
not been resolved through normal chan
nels, or who believe that an IRS system
or procedure is not working as it should.
If you believe you are eligible for TAS
assistance, you can reach TAS by calling
toll free 1-877-777-4778, or
TTY/TTD 1-800-829-4059.
Low Income Taxpayer Clinic (LITC) —
Low Income Taxpayer Clinics are
independent organizations that provide low
income taxpayers with representation in
Federal tax controversies with the IRS for
free or for a nominal charge. The clinics
also provide tax education and outreach for
taxpayers with limited English proficiency or
who speak English as a second language.
IRS Publication 4134, Low Income Taxpay
er Clinic List, provides information on clinics
in your area and is available through the IRS
website at www.irs.gov, by phone at
1-800-TAX-FORM (1-800-829-3676),
or at your local IRS office.
Penalties and Interest — Penalites and
interest will continue to accrue on your
unpaid balance of assessment(s) while
your offer is being considered.
37
Terms and Definitions
An understanding of the following
terms and conditions will help you to
prepare offers based upon doubt as
to collectibility or effective tax
administration.
Current Value — The amount you
could reasonably expect from the sale
of an asset today. Provide an accurate
valuation of each asset. Determine
value from realtors, used car dealers,
publications, furniture dealers, or other
experts on specific types of assets.
Please include a copy of any written
estimate with your Collection Information
Statement.
Expenses Not Generally Allowed —
We typically do not allow you to claim
tuition for private schools, public or
private college expenses, charitable
contributions, voluntary retirement
contributions, payments on unsecured
debts such as credit card bills, cable
television charges and other similar
expenses as necessary living expenses.
However, we may allow these expenses
when you can prove that they are
necessary for the health and welfare of
you or your family or for the production
of income.
Future Income — We generally
determine the amount we could collect
from your future income by subtracting
necessary living expenses from your
monthly income over a set number of
months. For a lump sum cash offer
paid in five months or less, you must
offer what you could pay in monthly
payments over forty-eight months (or
the remainder of the ten-year statutory
period for collection, whichever is less).
For a Lump Sum Cash Offer paid in
more than five months or a Short Term
Periodic Payment Offer, you must offer
what you could pay in monthly payments
over 60 months (or the remainder of the
statutory period for collection, whichever
is less). For a deferred periodic payment
offer, you must offer what you could
pay in monthly payments during the
remaining time we could legally receive
payments.
19
Necessary Expenses — Necessary
expenses are the allowable payments
you make to support you and your
family’s health and welfare and/
or the production of income. These
expenses do not apply to businesses.
See our website at www.irs.gov for
an explanation of National Standard
Expenses and the amounts that are
allowed. We derive these amounts
from the Bureau of Labor Statistics
Consumer Expenditure Survey. We also
use information from the Bureau of the
Census to determine local expenses for
housing, utilities, and transportation.
NOTE:
If the IRS determines that the
facts and circumstances of
your situation indicate that
using the scheduled allowance
of necessary expenses is
inadequate, we will allow
you an adequate means for
providing basic living expenses.
However you must provide
documentation that using
national and local expense
standards leaves you an
inadequate means of providing
for basic living expenses.
Quick Sale Value (QSV) — The amount
you could reasonably expect from the
sale of an asset if you sold it quickly,
typically in ninety days or less. This
amount generally is less than current
value, but may be equal to current value,
based on local circumstances.
Realizable Value — The quick sale
value amount minus what you owe to a
secured creditor. The creditor must have
priority over a filed Notice of Federal Tax
Lien before we allow a subtraction from
the asset’s value.
Reasonable Collection Potential (RCP)
— The total realizable value of your
assets plus your future income. The total
is generally your minimum offer amount.
38
Step Eight: Completing Form 656, Offer in Compromise
Note: If you have any questions about completing this form, you may call toll free at
1–800–829–1040 or visit your local IRS office or our website at www.irs.gov.
We may return your offer if you fail to follow these instructions.
Section I:
Enter your name and home and business
street address. Show both names on
a joint offer for joint liabilities. You also
should include a mailing address if it is
different from your street address.
If you owe a liability —
Jointly with another person and both of
you agree to submit an offer, send only
one Form 656, Offer in Compromise,
and one $150 application fee (or Form
656-A, if applicable) and one payment
(20% of the amount offered or first initial
payment).
By yourself (such as employment taxes),
and other liabilities with another person
(such as income taxes), but only you
are submitting an offer, then list all tax
liabilities on one Form 656 and submit
one $150 application fee (or Form 656-A,
if applicable) and one payment (20% of
amount offered or first initial payment).
By yourself and another one jointly,
and both of you submit an offer, then
you must show all tax liabilities on
Section II:
Identify the type of tax liability you owe
and enter the tax year or period. Letters
and notices from us and Notices of
20
your Form 656 and submit one $150
application fee (or Form 656-A, if
applicable) and payment (20% of offer
amount or first initial payment). The other
person should show only the joint tax
liability on their Form 656 and submit one
$150 application fee (or Form 656-A, if
applicable) and payment (20% of amount
offered or first initial payment)
Please see the matrix in Step 4, Page 12,
for further instructions and examples.
Enter the social security number(s)
for the person(s) submitting the offer. For
example, enter the social security number
of both spouses when submitting a joint
offer for a joint tax liability. However,
when only one spouse submits an offer,
enter only that spouse’s social security
number
Enter the employer identification number
for offers from businesses.
Show the employer identification
numbers for all other businesses that you
own or in which you have an ownership
interest, even if they are not included in
the offer.
Federal Tax Lien show the tax periods for
trust fund recovery penalties.
39
Section III:
Check the appropriate box(es)
describing the basis for your offer.
Doubt as to Collectibility offers require
you to complete a Form 433-A, Collection
Information Statement for Wage Earners
and Self-Employed Individuals, if you are
an individual taxpayer, or a Form 433B, Collection Information Statement for
Businesses, if you are a corporation or other
business taxpayer.
Effective Tax Administration offers
require you to complete a Form 433-A,
Collection Information Statement for
Wage Earners and Self-Employed
Individuals, if you are an individual
taxpayer, or a Form 433-B, Collection
Information Statement for Businesses,
if you are a corporation or other
business taxpayer. Complete Section VI,
“Explanation of Circumstances.”
Note: Attach to the upper left corner of Form 656 the six (6) pages of the collection
information statement(s) and all related documents before you send it to us.
Section IV:
Enter the total amount of your offer
(see Page 6, Step Three, “Determining
the Amount of Your Offer”). Your offer
amount cannot include a refund we
owe you or amounts you have already
paid.
Check the appropriate payment box (Lump
Sum Cash Offer, Short Term Periodic
Payment Offer, or Deferred Periodic
Payment Offer — see Page 7, “Determine
Your Payment Terms”) and describe your
payment plan in the spaces provided.
Section V:
It is important that you understand
the requirements listed in this section.
Pay particular attention to Items (d), (f)
and (g), as they address the future
compliance provision and refunds.
Section VI:
Explain your reason(s) for submitting
your offer in the “Explanation of
Circumstances.” You may attach
additional sheets if necessary.
Include your name and SSN or EIN
on all attachments. If you believe you
have special circumstances affecting
your ability to fully pay the amount due,
thoroughly explain your situation.
Section VII:
Explain where you will get the funds to
pay the amount you are offering.
Section VIII:
All persons submitting the offer must
sign and date Form 656. Include titles of
authorized corporate officers,
executors, trustees, Powers of Attorney,
etc., where applicable.
Section IX:
If someone other than the taxpayer
prepared this Offer in Compromise, the
taxpayer should insert the name and
address of the preparer (if known) in
Section IX.
Section X:
Paid Preparer Use Only.
Please see the “Privacy Act Notice” in
Form 656.
21
40
Section XI:
If you want to allow the IRS to discuss
your Offer in Compromise with a friend,
family member, or any other person,
including an individual you paid to
prepare this form, check the “Yes” box
in Section XI, “Third Party Designee,” on
your Form 656. Also enter the designee’s
name and phone number. Checking
the “Yes” box allows the IRS to contact
another person and discuss with that
person any additional information
the IRS needs to process your offer.
This additional information may include
information about tax liabilities you
failed to list in Section II on your Form
656 or returns you have failed to file. If
your contact person is an attorney, CPA,
or enrolled agent and you wish to have
them represent you regarding this offer,
a Form 2848, Power of Attorney and
Declaration of Representative, should
be completed and submitted with your
offer.
Note: Staple Form 2848, Power of Attorney and Declaration of Representative, to
the upper left corner of Form 656 before you send it to us.
22
41
Form
656
Department of the Treasury — Internal Revenue Service
Offer in Compromise
(March 2009)
Attach Application Fee and Payment (check or money order) here.
Section I
IRS RECEIVED DATE
Taxpayer Contact Information
Taxpayer’s First Name and Middle Initial
Last Name
If a joint offer, spouse’s First Name and Middle Initial
Last Name
Business Name
Taxpayer’s Address (Home and Business) (number, street, and room or suite no., city, state, ZIP code)
Mailing Address (if different from above) (number, street, and room or suite no., city, state, ZIP code)
DATE RETURNED
Social Security Number (SSN)
(Primary)
Employer Identification Number (EIN)
(Secondary)
-
-
-
Section II
(EIN not included in offer)
(EIN included in offer)
-
-
-
To: Commissioner of Internal Revenue Service
I/We (includes all types of taxpayers) submit this offer to compromise the tax liabilities plus any interest, penalties, additions to tax, and additional amounts
required by law (tax liability) for the tax type and period marked below: (Please mark an “X” in the box for the correct description and fill-in the correct tax period(s),
adding additional periods if needed).
1040/1120 Income Tax - Year(s)
941 Employer's Quarterly Federal Tax Return - Quarterly period(s)
940 Employer’s Annual Federal Unemployment (FUTA) Tax Return — Year(s)
Trust Fund Recovery Penalty as a responsible person of (enter corporation name)
,
for failure to pay withholding and Federal Insurance Contributions Act taxes (Social Security taxes), for period(s) ending
Other Federal Tax(es) [specify type(s) and period(s)]
Note: If you need more space, use a separate sheet of paper and title it “Attachment to Form 656 Dated
attachment following the listing of the tax periods.
Section III
.” Sign and date the
Reason for Offer in Compromise
I/We submit this offer for the reason(s) checked below:
Doubt as to Collectibility — “I have insufficient assets and income to pay the full amount.” You must include a complete Collection Information
Statement, Form 433-A and/or Form 433-B.
Effective Tax Administration — “I owe this amount and have sufficient assets to pay the full amount, but due to my exceptional circumstances,
requiring full payment would cause an economic hardship or would be unfair and inequitable.” You must include a complete Collection Information
Statement, Form 433-A and/or Form 433-B and complete Section VI.
Offer in Compromise Terms
Section IV
I/We offer to pay $
(must be more than zero). Complete Section VII to explain where you will obtain the funds to make this offer.
Check only one of the following:
Lump sum cash offer – 20% of the amount of the offer $
the balance must be paid in 5 or fewer installments.
must be sent with Form 656. Upon written acceptance of the offer,
$
$
$
$
$
payable within
months after acceptance
payable within
months after acceptance
months after acceptance
payable within
months after acceptance
payable within
months after acceptance
payable within
Short Term Periodic Payment Offer - Offer amount is paid within 24 months from the date IRS received your offer. The first payment must be
submitted with your Form 656. You must make regular payments during your offer investigation. Complete the following:
$
will be submitted with the Form 656. Beginning in the month after the offer is submitted (insert month
day of each month, $
will be sent in for a total of
the offer was submitted.)
Catalog Number 16728N
www.irs.gov
), on the
months. (Cannot extend more than 24 months from the date
42
Form 656 (Rev. 3-2009)
Page 2 of 4
Section IV Cont.
Deferred Periodic Payment Offer – Offer amount will be paid over the remaining life of the collection statute. The first payment must be
submitted with your Form 656. You must make regular payments during your offer investigation. Complete the following:
$
), on the
will be submitted with the Form 656. Beginning in the month after the offer is submitted (insert month
day of each month, $
will be sent in for a total of
months.
Optional - Designation of Required Payment under IRC 7122(c)
You have the option to designate the required payment you made under Section IV above. If you choose not to designate your required payment,
then the IRS will apply your payment in the best interest of the government. If the required payment is not paid, the offer will be returned even if you
make a payment you designated as a deposit. Please complete the following if you choose to designate your payment:
$
Tax Year/Quarter(s) (whichever is applicable) for my/our tax
paid under IRC 7122 (c) is to be applied to my
form
.
If you pay more than the required payment when you submit your offer and want any part of that additional payment treated as a deposit, check the
box below and insert the amount. It is not required that you designate any portion of your payment as a deposit.
I am making a deposit of $
Section V
with this offer.
By submitting this offer, I/we have read, understand and agree to the following conditions:
(a) I/We voluntarily submit all tax payments made on this offer,
including the mandatory payments of tax required under
section 7122(c). These tax payments are not refundable even
if I/we withdraw the offer prior to acceptance or the IRS
returns or rejects the offer. If the offer is accepted, the IRS will
apply payments made after acceptance in the best interest of
the government.
(b) Any payments made in connection with this offer will be
applied to the tax liability unless I have specified that they be
treated as a deposit. Only amounts that exceed the
mandatory payments can be treated as a deposit. Such a
deposit will be refundable if the offer is rejected or returned
by the IRS or is withdrawn. I/we understand that the IRS will
not pay interest on any deposit.
(c) The application fee for this offer will be kept by the
IRS unless the offer was not accepted for processing.
(d) I/We will comply with all provisions of the Internal Revenue
Code relating to filing my/our returns and paying my/our
required taxes for 5 years or until the offered amount is paid in
full, whichever is longer. In the case of a jointly submitted
Offer in Compromise of joint liabilities, I/we understand that
default with respect to the compliance provisions described in
this paragraph by one party to this agreement will not result in
the default of the entire agreement. The default provisions
described in Section V(i) of this agreement will be applied only
to the party failing to comply with the requirements of this
paragraph.
(e) I/We waive and agree to the suspension of any statutory
periods of limitation (time limits provided by law) for the IRS
assessment of the liability for the periods identified in Section
II. I/We understand that I/we have the right not to waive
these statutory periods or to limit the waiver to a certain length
or to certain periods. I/we understand, however, that the IRS
may not consider this offer if I/we refuse to waive the statutory
periods for assessment or if we provide only a limited waiver.
The amount of any Federal tax due for the periods described
in Section II may be assessed at any time prior to the
acceptance of this offer or within one year of the rejection of
this offer. I/We understand that the statute of limitations for
collection will be suspended during the period an offer is
considered pending by the IRS (paragraph (k) of this section
defines pending).
Catalog Number 16728N
(f) The IRS will keep all payments and credits made, received
or applied to the total original liability before submission of this
offer and all payments required under section 7122(c). The
IRS will also keep all payments in excess of those required by
section 7122(c) that are received in connection with the offer
and that are not designated as deposits in Section IV. The
IRS may keep any proceeds from a levy served prior to
submission of the offer, but not received at the time the offer
is submitted. As additional consideration beyond the amount
of my/our offer, the IRS will keep any refund, including
interest, due to me/us because of overpayment of any tax or
other liability, for tax periods extending through the calendar
year in which the IRS accepts the offer. The date of
acceptance is the date on the written notice of acceptance
issued by the IRS to me/us or to my/our representative. I/We
may not designate an overpayment ordinarily subject to
refund, to which the IRS is entitled, to be applied to estimated
tax payments for the following year.
(g) I/We will return to the IRS any refund identified in
paragraph (f) received after submission of this offer.
(h) The IRS cannot collect more than the full amount of
the liability under this offer.
(i) I/We understand that I/we remain responsible for the full
amount of the liabilities, unless and until the IRS accepts the
offer in writing and I/we have met all the terms and conditions
of the offer. The IRS will not remove the original amount of
the liabilities from its records until I/we have met all the terms
and conditions of the offer. I/we understand that the liabilities
I/we offer to compromise are and will remain liabilities until
I/we meet all the terms and conditions of this offer. If I/we file
for bankruptcy before the terms and conditions of this offer
are completed, any claim the IRS files in the bankruptcy
proceedings will be a tax claim.
(j) Once the IRS accepts the offer in writing, I/we have
no right to contest, in court or otherwise, the amount of
the liability.
(k) The offer is pending starting with the date an authorized
IRS official signs the form. The offer remains pending until an
authorized IRS official accepts, rejects, returns or
acknowledges withdrawal of the offer in writing. If I/we appeal
an IRS rejection decision on the offer, the IRS will continue to
treat the offer as pending until the Appeals Office accepts or
rejects the offer in writing.
www.irs.gov
43
Form 656 (Rev. 3-2009)
Page 3 of 4
If I/we don’t file a protest within 30 days of the date the IRS
notifies me/us of the right to protest the decision, I/we waive the
right to a hearing before the Appeals Office about the Offer in
Compromise.
(l) If I/we fail to meet any of the terms and conditions of the
offer and the offer defaults, the IRS may:
• immediately file suit to collect the entire unpaid balance of
the offer;
• immediately file suit to collect an amount equal to the
original amount of the liability, minus any payment already
received under the terms of this offer;
• disregard the amount of the offer and apply all amounts
already paid under the offer against the original amount of
the liability; and/or
• file suit or levy to collect the original amount of the liability,
without further notice of any kind.
(m) The IRS generally files a Notice of Federal Tax Lien to
protect the Government’s interest on offers with deferred
payments. Also, the IRS may file a Notice of Federal Tax Lien
during the offer investigation. This tax lien will be released
when the payment terms of the offer agreement have been
satisfied.
(n) I/We understand that IRS employees may contact third
parties in order to respond to this request and I/we authorize
the IRS to make such contacts. Further, by authorizing the IRS
to contact third parties, I/we understand that I/we will not
receive notice, pursuant to section 7602(c) of the Internal
Revenue Code, of third parties contacted in connection with
this request.
(o) I/We are offering to compromise all the liabilities assessed
against me/us as of the date of this offer and under the
taxpayer identification numbers listed in Section II above. I/We
authorize the IRS to amend Section II, above, to include any
assessed liabilities we failed to list on Form 656.
The IRS will continue to add interest, as section 6601 of the
Internal Revenue Code requires, on the amount the IRS
determines is due after default. The IRS will add interest from
the date the offer is defaulted until I/we completely satisfy the
amount owed.
Section VI
Explanation of Circumstances
I am requesting an Offer in Compromise for the reason(s) listed below:
Note: If you believe you have special circumstances affecting your ability to fully pay the amount due, explain your situation. You may attach additional
sheets if necessary. Please include your name and SSN or EIN on all additional sheets or supporting documentation.
Section VII
Source of Funds
I / We shall obtain the funds to make this offer from the following source(s):
Catalog Number 16728N
www.irs.gov
44
Form 656 (Rev. 3-2009)
Page 4 of 4
Section VIll
Mandatory Signatures
If I / we submit this offer on a substitute form, I/ we affirm that this form is a verbatim duplicate of the official Form 656,
and I/we agree to be bound by all the terms and conditions set forth in the official Form 656.
Under penalties of perjury, I declare that I have examined this offer, including accompanying schedules and statements,
and to the best of my knowledge and belief, it is true, correct and complete.
Taxpayer
Attestation
Signature of Taxpayer
Date (mmddyyyy)
Daytime Telephone Number
(
)
Signature of Taxpayer
Date (mmddyyyy)
Official Use Only
I accept the waiver of the statutory period of limitations on assessment for the Internal Revenue Service, as described in Section V(e).
Signature of Authorized Internal Revenue Service Official
Section IX
Title
Date (mmddyyyy)
Application Prepared by Someone Other than the Taxpayer
If this application was prepared by someone other than the taxpayer, please fill in that person’s name and address below.
Name
Address (if known) (Street, City, State, ZIP code)
Section X
Paid Preparer Use Only
Name of Preparer
Date (mmddyyyy)
Signature of Preparer
Check if
self-employed
Preparer’s CAF no. or PTIN
Firm’s name (or yours if self-employed), address, and ZIP code
Section XI
Third Party Designee
Do you want to allow another person to discuss this offer with the IRS?
Yes. Complete the information below.
Designee’s Name
No
Telephone Number
(
)
Privacy Act Statement
We ask for the information on this form to carry out the internal revenue laws of the United States. Our authority to request this information is Section 7801 of the Internal
Revenue Code.
Our purpose for requesting the information is to determine if it is in the best interests of the IRS to accept an Offer in Compromise. You are not required to make an Offer
in Compromise; however, if you choose to do so, you must provide all of the taxpayer information requested. Failure to provide all of the information may prevent us from
processing your request.
If you are a paid preparer and you prepared the Form 656 for the taxpayer submitting an offer, we request that you complete and sign Section X on Form 656, and provide
identifying information. Providing this information is voluntary. This information will be used to administer and enforce the internal revenue laws of the United States and may
be used to regulate practice before the Internal Revenue Service for those persons subject to Treasury Department Circular No. 230, Regulations Governing the Practice of
Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service. Information on this form may be disclosed
to the Department of Justice for civil and criminal litigation.
We may also disclose this information to cities, states and the District of Columbia for use in administering their tax laws and to combat terrorism. Providing false or
fraudulent information on this form may subject you to criminal prosecution and penalties.
Attention:
Instructions and pertaining forms for completing an accurate Offer in Compromise are available in the
Form 656-B, Offer in Compromise Booklet. The Form 656-B is available through the IRS website www.irs.gov.
Catalog Number 16728N
www.irs.gov
45
Form 656 (Rev. 3-2009)
Offer in Compromise Application Fee and Payment Worksheet
This worksheet should only be completed if you are requesting an exception to the $150 application fee and
payment(s) because of your income.
It is important that you use the current version Form 656 (Rev. 03-2009), Offer in Compromise, and the
(Rev. 1-2008) versions of Forms 433-A, Collection Information Statement for Wage Earners and Self-Employed
Individuals, that are included in this package.
Individuals whose income falls at or below levels based on IRS Offer in Compromise Low Income Guidelines are not
required to pay the application fee or the required initial payments. This exception only applies to individuals; it does not
apply to other entities such as corporations or partnerships. You should use the worksheet below to determine if you meet
the eligibility requirements.
If you are an individual, follow the steps below to determine if you must pay the application fee and any 20% payment
or first initial installment with your Form 656, Offer in Compromise.
1. Family Unit Size_____. Enter the total number of dependants (including yourself and your spouse) listed in Section 1
of Form 433-A, Collection Information Statement for Wage Earners and Self-Employed individuals. Transfer this num
ber to Form 656-A, Item 5.
2. Total Household Monthly Income_____________. Enter the amount of your total household monthly income from
Section 4, Line 32, “Total Income”, of the Form 433A, Collection Information Statement for Wage Earners and
Self-Employed Individuals. Please see Page 4 under Step Two, item 5, for a definition of total household income.
Transfer this number to Form 656-A, Item 6.
If you are self-employed you must comply to footnote number 6 instructions regarding business deductions and
treatment of depreciation before you compute the Net Business Income amount for line 82, and carry it over to
Form 433A, section 4, line 23 to Form 656-A, Item 6.
3. Compare the information you entered in items 1 and 2, above, to the IRS OIC Low Income Guidelines table below.
Find the "Family Unit Size" equal to the number you entered in item 1. Next, find the column which represents where
you reside (48 Contiguous states, DC …, Hawaii or Alaska). Compare the “Total Household Income” you entered in
item 2 to the number in the row and column that corresponds to your family unit size and residence. For example, if
you reside in one of the 48 contiguous states, and your family unit size from item 1 above is 4, and your total house
hold monthly income from item 2 above is $3000, then you are exempt from the application fee and payment because
your income is less than the $4,594 guideline amount.
IRS OIC Low Income Guidelines
Size of Family Unit
48 Contiguous States and D.C.
Hawaii
Alaska
1
$2,256
$2,596
$2,819
2
$3,035
$3,492
$3,794
3
$3,815
$4,388
$4,769
4
$4,594
$5,283
$5,744
5
$5,373
$6,179
$6,719
6
$6,152
$7,075
$7,694
7
$6,931
$7,971
$8,669
8
$7,710
$8,867
$9,644
For each additional person, add
$779
$896
$975
4. If the total household monthly income you entered in item 2 is more than the amount shown for your family unit size
and residence in the monthly IRS OIC Low Income Guidelines table above, you must send the $150 application fee
and any 20% payment or first initial installment with each OIC you submit.
Your check or money order should be made payable to the "United States Treasury" and attached to the front of your
Form 656, Offer In Compromise. Do Not Send Cash. Send a separate application fee with each OIC; do not combine it
with any other tax payments as this may delay processing of your OIC. Your OIC will be returned to you without further
consideration if the application fee and the required payments are not properly remitted, or if your check is returned for
insufficient funds.
5. If the total income you entered in item 2 is equal to or less than the amount shown for your family unit size and residence in
the table above, do not send the application fee or the required payments. Sign and date Form 656-A, Income Certification
for Offer in Compromise Application Fee and Payment. Attach the certification to the front of your Form 656.
46
This page intentionally left blank
28
47
Department of the Treasury — Internal Revenue Service
Form
656-A
(March 2009)
Income Certification for Offer in Compromise
Application Fee and Payment
(For Individual Taxpayers Only)
If you are not required to submit the fee or payments based on your income level, you must complete this form
and attach it to the front of your Form 656. You do not need to attach the Offer in Compromise Application Fee
and Payment Worksheet to the Form 656.
1. Your Name (Last, First, Middle initial) (Please Print)
2. Social Security Number (SSN) or
Taxpayer Identification Number (TIN)
3. Spouse's Name (Last, First, Middle initial) (Please Print)
4. Social Security Number (SSN) or
Taxpayer Identification Number (TIN)
5. Family Unit Size (This number is transferred over from your Offer in Compromise Application Fee and Payment Worksheet)
6. Total Household Monthly Income (This amount is transferred over from your Offer in Compromise Application Fee and Payment Worksheet)
$
Certification: Under the penalty of perjury, I certify that I am not required to submit an Offer in Compromise
application fee or payment, based on family unit size and income.
Your Signature
Date
Spouse's Signature (if submitting a joint Offer in Compromise)
Date
Catalog Number 28300X
www.irs.gov
48
Form 656-A (Rev. 3-2009)
49
Form 656-PPV
(March 2009)
Department of the Treasury — Internal Revenue Service
Offer in Compromise - Periodic Payment Voucher
If you filed an offer in compromise and the offered amount is to be paid in 24 months or fewer (Short Term Periodic Payment Offer) or monthly
installments paid within the statutory period (Deferred Periodic Payment Offer) in accordance with the Tax Increase Prevention and Reconciliation
Act of 2005, you must continue to make the payments during the investigation of the offer until you receive a decision letter (accepted, rejected,
returned, or withdrawn). Mail this voucher with your check or money order payable to the "United States Treasury." Write your social security number or
employer identification number on the check or money order. Do not send cash. You may designate a specific tax liability to apply the payments. If you
choose to do this, please write it in the "Apply to" section of the Form 656-PPV.
Enclose your payment with this voucher and mail to:
For those offers originally sent to Holtsville, NY, please send payments to: P.O. Box 9011, Holtsville, NY 11742
For those offers originally sent to Memphis, TN, please send payments to: AMC-Stop 880, PO Box 30834, Memphis, TN 38130-0834
(Please Print or Type)
Taxpayer's First Name and Initial
Taxpayer's Last Name
Taxpayer's Address (number, street, and room or suite no., city, state, ZIP code)
Your Social Security Number (SSN) or
Employer Identification Number (EIN)
Amount of Your Payment
(Dollars)
(Cents)
$
Offer Number (If you are submitting a payment (as described above) and this Form 656-PPV with your offer, then
please leave this section blank. An offer number will be assigned and sent to you once your offer is processed.)
Apply Payment to: (optional)
Form
Period
Catalog Number 31131Y
www.irs.gov
Form 656-PPV (Rev. 3-2009)
50
51
1
TLS, have you
transmitted all R
text files for this
cycle update?
Date
Form
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-A, PAGE 1 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
433-A
Action
Date
Signature
O.K. to print
Revised proofs
requested
Collection Information Statement for Wage
Earners and Self-Employed Individuals
(Rev. January 2008)
Department of the Treasury
Internal Revenue Service
Wage Earners Complete Sections 1, 2, 3, and 4, including signature line on page 4. Answer all questions or write N/A.
Self-Employed Individuals Complete Sections 1, 2, 3, 4, 5 and 6 and signature line on page 4. Answer all questions or write N/A.
For Additional Information, refer to Publication 1854, “How To Prepare a Collection Information Statement”
Include attachments if additional space is needed to respond completely to any question.
Name on Internal Revenue Service (IRS) Account
Social Security Number SSN on IRS Account
Employer Identification Number EIN
Section 1: Personal Information
1a Full Name of Taxpayer and Spouse (if applicable)
1c Home Phone
(
1d Cell Phone
)
(
1e Business Phone
1b Address (Street, City, State, ZIP code) (County of Residence)
(
)
1f Business Cell Phone
)
(
)
2b Name, Age, and Relationship of dependent(s)
2a Marital Status:
Married
Unmarried (Single, Divorced, Widowed)
Social Security No. (SSN)
Date of Birth (mmddyyyy)
Driver’s License Number and State
3a Taxpayer
3b Spouse
Section 2: Employment Information
If the taxpayer or spouse is self-employed or has self-employment income, also complete Business Information in Sections 5 and 6.
Taxpayer
Spouse
4a Taxpayer’s Employer Name
5a Spouse’s Employer Name
4b Address (Street, City, State, ZIP code)
5b Address (Street, City, State, ZIP code)
4c Work Telephone Number
5c Work Telephone Number
(
4d Does employer allow contact at work
)
4e How long with this employer 4f
(years)
(months)
4g Number of exemptions
claimed on Form W-4
Yes
Occupation
(
No
5d Does employer allow contact at work
)
5e How long with this employer 5f
4h Pay Period:
Weekly
Monthly
Bi-weekly
Other
(years)
(months)
5g Number of exemptions
claimed on Form W-4
Yes
Occupation
5h Pay Period:
Weekly
Monthly
No
Bi-weekly
Other
Section 3: Other Financial Information (Attach copies of applicable documentation.)
6
Yes
Is the individual or sole proprietorship party to a lawsuit (If yes, answer the following)
Plaintiff
Amount of Suit
Location of Filing
Represented by
Possible Completion Date (mmddyyyy)
Subject of Suit
No
Docket/Case No.
Defendant
$
7
Has the individual or sole proprietorship ever filed bankruptcy (If yes, answer the following)
Date Filed (mmddyyyy)
8
Date Dismissed or Discharged (mmddyyyy)
Petition No.
Any increase/decrease in income anticipated (business or personal) (If yes, answer the following)
Explain. (Use attachment if needed)
How much will it increase/decrease
Yes
No
Location
Yes
No
When will it increase/decrease
$
9
Is the individual or sole proprietorship a beneficiary of a trust, estate, or life insurance policy
(If yes, answer the following)
Place where recorded:
Yes
No
EIN:
Name of the trust, estate, or policy
Anticipated amount to be received
When will the amount be received
$
10
In the past 10 years, has the individual resided outside of the United States for periods of 6 months or longer
(If yes, answer the following)
Dates lived abroad: from (mmddyyyy)
www.irs.gov
Yes
No
To (mmddyyyy)
Cat. No. 20312N
Form
433-A
52
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-A, PAGE 2 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-A (Rev. 1-2008)
Page
2
Section 4: Personal Asset Information for All Individuals
11
Cash on Hand. Include cash that is not in a bank.
Total Cash on Hand
$
Personal Bank Accounts. Include all checking, online bank accounts, money market accounts, savings accounts, stored value
cards (e.g., payroll cards, government benefit cards, etc.) List safe deposit boxes including location and contents.
Type of
Account
Full Name & Address (Street, City, State, ZIP code) of Bank, Savings
& Loan, Credit Union, or Financial Institution.
Account Balance As of ____________
Account Number
mmddyyyy
12a
$
12b
$
12c Total Cash (Add lines 12a, 12b, and amounts from any attachments)
$
Investments. Include stocks, bonds, mutual funds, stock options, certificates of deposit, and retirement assets such as IRAs, Keogh, and
401(k) plans. Include all corporations, partnerships, limited liability companies or other business entities in which the individual is
an officer, director, owner, member, or otherwise has a financial interest.
Type of
Investment or
Financial Interest
Full Name & Address (Street, City, State, ZIP code) of Company
Loan Balance
(if applicable)
As of ____________
Current Value
Equity
Value Minus Loan
mmddyyyy
13a
Phone
$
$
$
Phone
$
$
$
Phone
$
$
$
13b
13c
13d Total Equity (Add lines 13a through 13c and amounts from any attachments)
$
Amount Owed
As of ____________
Available Credit. List bank issued credit cards with available credit.
Credit Limit
Full Name & Address (Street, City, State, ZIP code) of Credit Institution
Available Credit
As of ____________
mmddyyyy
mmddyyyy
14a
Acct No.:
$
$
$
Acct No.:
$
$
$
14b
14c
$
Total Available Credit (Add lines 14a, 14b and amounts from any attachments)
15a Life Insurance. Does the individual have life insurance with a cash value (Term Life insurance does not have a cash value.)
If Yes complete blocks 15b through 15f for each policy:
Yes
No
15b Name and Address
of Insurance
Company(ies):
15c
15d
15e
15f
Policy Number(s)
Owner of Policy
Current Cash Value
Outstanding Loan Balance
$
$
$
$
15g Total Available Cash. (Subtract amounts on line 15f from line 15e and include amounts from any attachments)
$
$
$
Form
433-A
53
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-A, PAGE 3 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-A (Rev. 1-2008)
16
Page
In the past 10 years, have any assets been transferred by the individual for less than full value
(If yes, answer the following. If no, skip to 17a)
List Asset
Value at Time of Transfer
Date Transferred (mmddyyyy)
Yes
3
No
To Whom or Where was it Transferred
$
Real Property Owned, Rented, and Leased. Include all real property and land contracts.
Purchase/Lease Date
(mmddyyyy)
Current Fair
Market Value
(FMV)
Amount of
Monthly
Payment
Current Loan
Balance
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
17a Property Description
$
$
$
$
Location (Street, City, State, ZIP code) and County
$
$
Lender/Lessor/Landlord Name, Address, (Street, City, State, ZIP code) and Phone
17b Property Description
Location (Street, City, State, ZIP code) and County
$
$
Lender/Lessor/Landlord Name, Address, (Street, City, State, ZIP code) and Phone
17c Total Equity (Add lines 17a, 17b and amounts from any attachments)
$
Personal Vehicles Leased and Purchased. Include boats, RVs, motorcycles, trailers, etc.
Description
(Year, Mileage, Make, Model)
18a Year
Current Fair
Purchase/Lease Date Market Value
(mmddyyyy)
(FMV)
18b Year
Make
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
Mileage
$
Make
Amount of
Monthly
Payment
Current Loan
Balance
Model
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
Mileage
Model
18c Total Equity (Add lines 18a, 18b and amounts from any attachments)
$
Personal Assets. Include all furniture, personal effects, artwork, jewelry, collections (coins, guns, etc.), antiques or other assets.
Purchase/Lease Date Current Fair
Market Value
(mmddyyyy)
(FMV)
Amount of
Monthly
Payment
Current Loan
Balance
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
19a Property Description
$
Location (Street, City, State, ZIP code) and County
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
19b Property Description
$
Location (Street, City, State, ZIP code) and County
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
19c Total Equity (Add lines 19a, 19b and amounts from any attachments)
$
Form
433-A
54
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-A, PAGE 4 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-A (Rev. 1-2008)
Page
4
If the taxpayer is self-employed, sections 5 and 6 must be completed before continuing.
Monthly Income/Expense Statement (For additional information, refer to Publication 1854.)
Total Income
Total Living Expenses
Source
20
Wages (Taxpayer)
21
Wages (Spouse)
1
22
23
24
25
26
27
Gross Monthly
1
$
Expense Items
33
Actual Monthly
Food, Clothing, and Misc.
34
Housing and Utilities
Interest - Dividends
$
Vehicle Ownership Costs
Net Business Income 2
Net Rental Income 3
$
$
$
35
36
37
38
39
40
Distributions
Pension/Social Security (Taxpayer)
$
$
6
Vehicle Operating Costs
$
8
$
$
9
Public Transportation 10
Health Insurance
Out of Pocket Health Care Costs
Court Ordered Payments
11
$
$
$
$
28
Pension/Social Security (Spouse)
Child Support
$
41
29
Alimony
$
42
30
Other (Rent subsidy, Oil credit, etc.)
Other
$
43
Taxes (Income and FICA)
$
$
$
44
45
Other Secured Debts (Attach list)
$
Total Living Expenses (add lines 33-44)
$
31
32
1
2
Total Income (add lines 20-31)
Allowable Expenses
$
7
$
4
IRS USE ONLY
5
Child/Dependent Care
Life insurance
$
$
Wages, salaries, pensions, and social security: Enter gross monthly wages and/or salaries. Do not deduct withholding or allotments taken
out of pay, such as insurance payments, credit union deductions, car payments, etc. To calculate the gross monthly wages and/or salaries:
If paid weekly - multiply weekly gross wages by 4.3. Example: $425.89 x 4.3 = $1,831.33
If paid biweekly (every 2 weeks) - multiply biweekly gross wages by 2.17. Example: $972.45 x 2.17 = $2,110.22
If paid semimonthly (twice each month) - multiply semimonthly gross wages by 2. Example: $856.23 x 2 = $1,712.46
Net Income from Business: Enter monthly net business income. This is the amount earned after ordinary and necessary monthly business
expenses are paid. This figure is the amount from page 6, line 82. If the net business income is a loss, enter “0”. Do not enter a negative
number. If this amount is more or less than previous years, attach an explanation.
3
Net Rental Income: Enter monthly net rental income. This is the amount earned after ordinary and necessary monthly rental expenses are
paid. Do not include deductions for depreciation or depletion. If the net rental income is a loss, enter “0”. Do not enter a negative number.
4
Distributions: Enter the total distributions from partnerships and subchapter S corporations reported on Schedule K-1, and from limited
liability companies reported on Form 1040, Schedule C, D or E.
5
Expenses not generally allowed: We generally do not allow tuition for private schools, public or private college expenses, charitable
contributions, voluntary retirement contributions, payments on unsecured debts such as credit card bills, cable television and other similar
expenses. However, we may allow these expenses if it is proven that they are necessary for the health and welfare of the individual or family
or for the production of income.
Food, Clothing, and Misc.: Total of clothing, food, housekeeping supplies, and personal care products for one month.
Housing and Utilities: For principal residence: Total of rent or mortgage payment. Add the average monthly expenses for the following:
property taxes, home owner’s or renter’s insurance, maintenance, dues, fees, and utilities. Utilities include gas, electricity, water, fuel, oil,
other fuels, trash collection, telephone, and cell phone.
6
7
8
Vehicle Ownership Costs: Total of monthly lease or purchase/loan payments.
9
Vehicle Operating Costs: Total of maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking, and tolls for one month.
10 Public Transportation: Total of monthly fares for mass transit (e.g., bus, train, ferry, taxi, etc.)
11 Out of Pocket Health Care Costs: Monthly total of medical services, prescription drugs and medical supplies (e.g., eyeglasses, hearing aids, etc.)
Certification: Under penalties of perjury, I declare that to the best of my knowledge and belief this statement of assets,
liabilities, and other information is true, correct, and complete.
Taxpayer’s Signature
Spouse’s Signature
Date
Attachments Required for Wage Earners and Self-Employed Individuals:
Copies of the following items for the last 3 months from the date this form is submitted (check all attached items):
Income - Earnings statements, pay stubs, etc. from each employer, pension/social security/other income, self employment income
(commissions, invoices, sales records, etc.).
Banks, Investments, and Life Insurance - Statements for all money market, brokerage, checking and savings accounts, certificates of
deposit, IRA, stocks/bonds, and life insurance policies with a cash value.
Assets - Statements from lenders on loans, monthly payments, payoffs, and balances for all personal and business assets. Include copies
of UCC financing statements and accountant’s depreciation schedules.
Expenses - Bills or statements for monthly recurring expenses of utilities, rent, insurance, property taxes, phone and cell phone, insurance
premiums, court orders requiring payments (child support, alimony, etc.), other out of pocket expenses.
Other - credit card statements, profit and loss statements, all loan payoffs, etc.
A copy of last year’s Form 1040 with all attachments. Include all Schedules K-1 from Form 1120S or Form 1065, as applicable.
Form
433-A
55
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-A, PAGE 5 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-A (Rev. 1-2008)
Page
5
Sections 5 and 6 must be completed only if the taxpayer is SELF-EMPLOYED.
Section 5: Business Information
46
Is the business a sole proprietorship (filing Schedule C)
Yes, Continue with Sections 5 and 6.
No, Complete Form 433-B.
All other business entities, including limited liability companies, partnerships or corporations, must complete Form 433-B.
47
Business Name
48
Employer Identification Number
49
50
Business Website
51
Total Number of Employees
52a
Type of Business
Federal Contractor
Yes
No
Average Gross Monthly Payroll
52b Frequency of Tax Deposits
53
Yes
Does the business engage in e-Commerce (Internet sales)
No
Payment Processor (e.g., PayPal, Authorize.net, Google Checkout, etc.) Name & Address (Street, City, State, ZIP code)
Payment Processor Account Number
54a
54b
Credit Cards Accepted by the Business.
Credit Card
Merchant Account Number
Merchant Account Provider, Name & Address (Street, City, State, ZIP code)
55a
55b
55c
56
Business Cash on Hand. Include cash that is not in a bank.
Total Cash on Hand $
Business Bank Accounts. Include checking accounts, online bank accounts, money market accounts, savings accounts, and stored value
cards (e.g. payroll cards, government benefit cards, etc.) Report Personal Accounts in Section 4.
Type of
Account
Full name & Address (Street, City, State, ZIP code) of Bank,
Savings & Loan, Credit Union or Financial Institution.
Account Balance
As of ____________
Account Number
mmddyyyy
57a
$
57b
$
57c Total Cash in Banks (Add lines 57a, 57b and amounts from any attachments)
$
Accounts/Notes Receivable. Include e-payment accounts receivable and factoring companies, and any bartering or online auction accounts.
(List all contracts separately, including contracts awarded, but not started.) Include Federal Government Contracts.
Accounts/Notes Receivable & Address (Street, City, State, ZIP code)
Status (e.g., age,
factored, other)
Date Due
(mmddyyyy)
Invoice Number or
Federal Government Contract Number
Amount Due
58a
$
58b
$
58c
$
58d
$
58e
$
Total Outstanding Balance (Add lines 58a through 58d and amounts from any attachments)
Form
433-A
56
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-A, PAGE 6 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-A (Rev. 1-2008)
Page
6
Business Assets. Include all tools, books, machinery, equipment, inventory or other assets used in trade or business. Include Uniform
Commercial Code (UCC) filings. Include Vehicles and Real Property owned/leased/rented by the business, if not shown in Section 4.
Current Fair
Market Value
(FMV)
Purchase/Lease/Rental
Date (mmddyyyy)
Amount of
Monthly
Payment
Current Loan
Balance
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
59a Property Description
$
$
$
$
Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code) and Phone
Location (Street, City, State, ZIP code) and County
59b Property Description
$
$
Location (Street, City, State, ZIP code) and County
$
$
Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code) and Phone
59c Total Equity (Add lines 59a, 59b and amounts from any attachments)
$
Section 6 should be completed only if the taxpayer is SELF-EMPLOYED
Section 6: Sole Proprietorship Information (lines 60 through 81 should reconcile with business Profit and Loss Statement)
Accounting Method Used:
Cash
Accrual
Income and Expenses during the period (mmddyyyy)
Total Monthly Business Income
Source
to (mmddyyyy)
.
Total Monthly Business Expenses (Use attachments as needed.)
Gross Monthly
Expense Items
60
Gross Receipts
$
70
Materials Purchased
1
61
62
Gross Rental Income
$
Inventory Purchased
2
Interest
$
71
72
63
Dividends
$
73
Rent
64
Cash
$
74
Supplies
75
Utilities/Telephone
76
66
$
$
Vehicle Gasoline/Oil
Repairs & Maintenance
67
68
$
$
78
79
80
Other Income (Specify below)
65
69
Actual Monthly
Gross Wages & Salaries
77
$
$
$
$
3
$
4
$
$
$
Insurance
$
$
Current Taxes 5
Other Expenses, including installment payments (Specify) $
Total Income (Add lines 60 through 68) $
81 Total Expenses (Add lines 70 through 80) $
$
82 Net Business Income (Line 69 minus 81) 6
Enter the amount from line 82 on line 23, section 4. If line 82 is a loss, enter “0” on line 23, section 4.
Self-employed taxpayers must return to page 4 to sign the certification and include all applicable attachments.
1
Materials Purchased: Materials are items directly related to the
production of a product or service.
5
2
6
Inventory Purchased: Goods bought for resale.
Supplies: Supplies are items used in the business that are consumed
or used up within one year. This could be the cost of books, office
supplies, professional equipment, etc.
3
4
Utilities/Telephone: Utilities include gas, electricity, water, oil, other
fuels, trash collection, telephone and cell phone.
Current Taxes: Real estate, excise, franchise, occupational,
personal property, sales and employer’s portion of employment taxes.
Net Business Income: Net profit from Form 1040, Schedule C may
be used if duplicated deductions are eliminated (e.g., expenses for
business use of home already included in housing and utility expenses
on page 4). Deductions for depreciation and depletion on Schedule C
are not cash expenses and must be added back to the net income
figure. In addition, interest cannot be deducted if it is already included
in any other installment payments allowed.
FINANCIAL ANALYSIS OF COLLECTION POTENTIAL
FOR INDIVIDUAL WAGE EARNERS AND SELF-EMPLOYED INDIVIDUALS
(IRS USE ONLY)
Cash Available
(Lines 11, 12c, 13d, 14c, 15g, 56, 57c and 58e)
Total Cash
$
Distrainable Asset Summary
(Lines 17c, 18c, 19c, and 59c)
Total Equity
$
Monthly Total Positive Income minus Expenses
(Line 32 minus Line 45)
Monthly Available Cash
$
Privacy Act: The information requested on this Form is covered under Privacy Acts and Paperwork Reduction
Notices which have already been provided to the taxpayer.
Form
433-A
57
(Rev. 1-2008)
1
TLS, have you
transmitted all R
text files for this
cycle update?
Date
Form
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-B, PAGE 1 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
433-B
Action
Date
Signature
O.K. to print
Revised proofs
requested
Collection Information Statement for Businesses
(Rev. January 2008)
Department of the Treasury
Internal Revenue Service
Note: Complete all entry spaces with the current data available or “N/A” (not applicable). Failure to complete all entry spaces may result in rejection of your
request or significant delay in account resolution. Include attachments if additional space is needed to respond completely to any question.
Section 1: Business Information
1a Business Name
1b Business Street Address
Mailing Address
City
State
1c County
1d Business Telephone (
1e Type of
Business
1f Business
Website
4
2a Employer Identification No. (EIN)
2b Type of Entity (Check appropriate box below)
Partnership
Corporation
Other
Limited Liability Company (LLC) classified as a corporation
Other LLC – Include number of members
2c Date Incorporated/Established
ZIP
mmddyyyy
)
3a
3b
3c
3d
Number of Employees
Monthly Gross Payroll
Frequency of Tax Deposits
Is the business enrolled in Electronic Federal
Tax Payment System (EFTPS)
Yes
Does the business engage in e-Commerce (Internet sales)
Yes
No
No
Payment Processor (e.g., PayPal, Authorize.net, Google Checkout, etc.), Name and Address (Street, Cty, State, ZIP code)
Payment Processor Account Number
5a
5b
Credit cards accepted by the business
Type of Credit Card (e.g., Visa, MasterCard, etc.)
Merchant Account Number
Merchant Account Provider Name and Address (Street, Cty, State, ZIP code)
6a
Phone
6b
Phone
6c
Section 2: Business Personnel and Contacts
Phone
Partners, Officers, LLC Members, Major Shareholders, Etc.
7a Full Name
Title
Home Address
City
State
ZIP
Yes
No
Responsible for Depositing Payroll Taxes
7b Full Name
Title
Home Address
State
ZIP
City
Yes
No
Responsible for Depositing Payroll Taxes
7c Full Name
Title
Home Address
State
ZIP
City
Yes
No
Responsible for Depositing Payroll Taxes
7d Full Name
Title
Home Address
City
State
Responsible for Depositing Payroll Taxes
www.irs.gov
ZIP
Yes
Social Security Number
)
Home Telephone (
(
)
Work/Cell Phone
Ownership Percentage & Shares or Interest
Social Security Number
)
Home Telephone (
(
)
Work/Cell Phone
Ownership Percentage & Shares or Interest
Social Security Number
)
Home Telephone (
(
)
Work/Cell Phone
Ownership Percentage & Shares or Interest
Social Security Number
)
Home Telephone (
(
)
Work/Cell Phone
Ownership Percentage & Shares or Interest
No
Cat. No. 16649P
Form
433-B 58
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-B, PAGE 2 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-B (Rev. 1-2008)
Page
2
Section 3: Other Financial Information (Attach copies of all applicable documentation.)
8
Yes
Does the business use a Payroll Service Provider or Reporting Agent (If yes, answer the following)
Effective dates (mmddyyyy)
Name and Address (Street, City, State, ZIP code)
9
Yes
Is the business a party to a lawsuit (If yes, answer the following)
Plaintiff
Defendant
Amount of Suit
No
Location of Filing
Represented by
Possible Completion Date (mmddyyyy)
Subject of Suit
No
Docket/Case No.
$
10
Has the business ever filed bankruptcy (If yes, answer the following)
Yes
No
Do any related parties (e.g., officers, partners, employees) have outstanding amounts owed to the business (If yes, answer the following)
Yes
No
Name and Address (Street, City, State, ZIP code)
Payment Amount
Date Filed (mmddyyyy)
11
Date Dismissed or Discharged (mmddyyyy) Petition No.
Date of Loan
Location
Current Balance As of
Payment Date
mmddyyyy
$
$
Have any assets been transferred, in the last 10 years, from this business for less than full value (If yes, answer the following)
12
List Asset
Value at Time of Transfer
Date Transferred (mmddyyyy)
Yes
No
To Whom or Where Transferred
$
Does this business have other business affiliations (e.g., subsidiary or parent companies) (If yes, answer the following)
13
Related Business Name and Address (Street, City, State, ZIP code)
Explain (use attachment if needed)
No
Yes
No
Related Business EIN:
Any increase/decrease in income anticipated (If yes, answer the following)
14
Yes
How much will it increase/decrease
When will it increase/decrease
$
Section 4: Business Asset and Liability Information
15
Cash on Hand. Include cash that is not in the bank
Total Cash on Hand
$
Business Bank Accounts. Include online bank accounts, money market accounts, savings accounts, checking accounts,
and stored value cards (e.g., payroll cards, government benefit cards, etc.)
List safe deposit boxes including location and contents.
Type of
Account
Full Name and Address (Street, City, State, ZIP code)
of Bank, Savings & Loan, Credit Union or Financial Institution.
Account Number
Account Balance As of
mmddyyyy
16a
$
16b
$
16c
$
16d Total Cash in Banks (Add lines 16a through 16c and amounts from any attachments)
$
Form
433-B
59
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-B, PAGE 3 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-B (Rev. 1-2008)
Page
3
Accounts/Notes Receivable. Include e-payment accounts receivable and factoring companies, and any bartering or online auction accounts.
(List all contracts separately, including contracts awarded, but not started.)
Yes
Is the business a Federal Government Contractor
17
Accounts/Notes Receivable & Address (Street, City, State, ZIP code)
Status (e.g., age,
factored, other)
No
(Include Federal Government contracts below)
Date Due
(mmddyyyy)
Invoice Number or
Federal Government Contract Number
Amount Due
18a
Contact Name:
Phone:
18b
$
Contact Name:
Phone:
18c
$
Contact Name:
Phone:
18d
$
Contact Name:
Phone:
18e
$
Contact Name:
Phone:
$
18f Outstanding Balance (Add lines 18a through 18e and amounts from any attachments)
$
Investments. List all investment assets below. Include stocks, bonds, mutual funds, stock options, and certificates of deposit.
Name of Company & Address (Street, City, State, ZIP code)
Used as collateral
on loan
Current Value
Equity
Value Minus Loan
Loan Balance
19a
Yes
No
Phone:
$
$
$
$
$
$
19b
Yes
No
Phone:
19c Total Investments (Add lines 19a, 19b, and amounts from any attachments)
Available Credit. Include all lines of credit and credit cards.
Credit Limit
Full Name & Address (Street, City, State, ZIP code) of Credit Institution
$
Amount Owed
As of
Available Credit
As of
mmddyyyy
mmddyyyy
20a
Account No.
$
$
$
Account No.
$
$
$
20b
$
20c Total Credit Available (Add lines 20a, 20b, and amounts from any attachments)
Form
433-B
60
(Rev. 1-2008)
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-B, PAGE 4 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-B (Rev. 1-2008)
Page
4
Real Property. Include all real property and land contracts the business owns/leases/rents.
Current Fair
Market Value
(FMV)
Purchase/Lease Date
(mmddyyyy)
Current Loan
Balance
Amount of
Monthly
Payment
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
21a Property Description
$
$
$
$
Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code), and Phone
$
$
$
$
Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code), and Phone
$
$
$
$
Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code), and Phone
$
$
$
$
Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code), and Phone
Location (Street, City, State, ZIP code) and County
21b Property Description
Location (Street, City, State, ZIP code) and County
21c Property Description
Location (Street, City, State, ZIP code) and County
21d Property Description
Location (Street, City, State, ZIP code) and County
21e Total Equity (Add lines 21a through 21d and amounts from any attachments)
$
Vehicles, Leased and Purchased. Include boats, RVs, motorcycles, trailers, mobile homes, etc.
Purchase/Lease Date
(mmddyyyy)
22a Year
Make
22b Year
Make
22c Year
Make
22d Year
Make
Current Fair
Market Value
(FMV)
Current Loan
Balance
Amount of
Monthly
Payment
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
Mileage
Model
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
Mileage
Model
Mileage
Model
Mileage
Model
$
22e Total Equity (Add lines 22a through 22d and amounts from any attachments)
Form
433-B
(Rev. 1-2008)
61
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-B, PAGE 5 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-B (Rev. 1-2008)
Page
5
Business Equipment. Include all machinery, equipment, merchandise inventory, and/or other assets.
Include Uniform Commercial Code (UCC) filings.
Purchase/Lease Date
(mmddyyyy)
Current Fair
Market Value
(FMV)
Current Loan
Balance
Amount of
Monthly
Payment
Date of Final
Payment
(mmddyyyy)
Equity
FMV Minus Loan
23a Asset Description
$
Location of asset (Street, City, State, ZIP code) and County
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
23b Asset Description
$
Location of asset (Street, City, State, ZIP code) and County
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
23c Asset Description
$
Location of asset (Street, City, State, ZIP code) and County
23d Asset Description
$
Location of asset (Street, City, State, ZIP code) and County
$
$
$
Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone
23e Total Equity (Add lines 23a through 23d and amounts from any attachments)
Business Liabilities. Include notes and judgments below.
Business Liabilities
24a Description:
Secured/
Unsecured
Date of Final
Payment
(mmddyyyy)
Payment
Amount
$
$
Phone:
Secured
Unsecured
Name
Street Address
City/State/ZIP code
24c Description:
Balance Owed
Secured
Unsecured
Name
Street Address
City/State/ZIP code
24b Description:
Date Pledged
(mmddyyyy)
$
$
$
Phone:
Secured
Unsecured
$
Name
Street Address
City/State/ZIP code
$
Phone:
24d Total Payments (Add lines 24a through 24c and amounts from any attachments)
$
Form
433-B
(Rev. 1-2008)
62
1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 433-B, PAGE 6 of 6
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") � 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT
Form 433-B (Rev. 1-2008)
Page
6
Section 5: Monthly Income/Expense Statement for Business
Accounting Method Used:
Cash
Accrual
Income and Expenses during the period (mmddyyyy)
to (mmddyyyy)
Total Monthly Business Income
Source
25
26
27
28
29
30
31
32
33
34
35
Gross Monthly
Gross Receipts from Sales/Services
Gross Rental Income
Interest Income
Dividends
Cash
Other Income (Specify below)
$
$
$
$
$
Expense Items
36
37
38
39
40
41
42
43
44
45
46
47
$
$
$
$
$
Total Income
(Add lines 25 through 34)
.
Total Monthly Business Expenses
$
48
1
Materials Purchased: Materials are items directly related to
the production of a product or service.
2 Inventory Purchased: Goods bought for resale.
3 Supplies: Supplies are items used to conduct business and
are consumed or used up within one year. This could be the cost
of books, office supplies, professional equipment, etc.
Actual Monthly
Materials Purchased1
Inventory Purchased2
Gross Wages & Salaries
Rent
Supplies3
Utilities/Telephone4
Vehicle Gasoline/Oil
Repairs & Maintenance
Insurance
Current Taxes5
Other Expenses (Specify)
$
$
$
$
$
$
$
$
$
$
$
IRS Use Only
Allowable Installment Payments
Total Expenses
(Add lines 36 through 47)
$
$
4
Utilities/Telephone: Utilities include gas, electricity, water,
oil, other fuels, trash collection, telephone and cell phone.
5 Current Taxes: Real estate, state, and local income tax,
excise, franchise, occupational, personal property, sales and
the employer’s portion of employment taxes.
Certification: Under penalties of perjury, I declare that to the best of my knowledge and belief this statement of assets,
liabilities, and other information is true, correct, and complete.
Signature
Title
Date
Print Name of Officer, Partner or LLC Member
Attachments Required:
Copies of the following items for the last 3 months from the date this form is submitted (check all attached items):
Banks and Investments - Statements for all money market, brokerage, checking/savings accounts, certificates of deposit, stocks/bonds.
Assets - Statements from lenders on loans, monthly payments, payoffs, and balances, for all assets. Include copies of UCC financing
statements and accountant’s depreciation schedules.
Expenses - Bills or statements for monthly recurring expenses of utilities, rent, insurance, property taxes, telephone and cell phone,
insurance premiums, court orders requiring payments, other expenses.
Other - credit card statements, profit and loss statements, all loan payoffs, etc.
Copy of the last income tax return filed; Form 1120, 1120S, 1065, 1040, 990, etc.
Additional information or proof may be subsequently requested.
FINANCIAL ANALYSIS OF COLLECTION POTENTIAL
FOR BUSINESSES
Cash Available
(Lines 15, 16d, 18f, 19c, and 20c)
(IRS USE ONLY)
Total Cash
$
Distrainable Asset Summary
(Lines 21e, 22e, and 23e)
$
Total Equity
Monthly Income Minus Expenses
(Line 35 Minus Line 48)
Monthly Available Cash
$
Privacy Act: The information requested on this Form is covered under Privacy Acts and Paperwork Reduction Notices which
have already been provided to the taxpayer.
Form
433-B
63
(Rev. 1-2008)
IRS
Department of the Treasury
Internal Revenue Service
Instructions for Form 656
Wage Earners and Self-Employed Individuals
Request to Settle Tax Debt
IRS contact information
If you have questions, please call our toll-free number at 1-800-829-1040. You can get
forms and publications by calling 1-800-829-3676 (1-800-TAX-FORM), or by visiting
your local IRS office or our website at www.irs.gov.
64
DRAFT—Wage Earners Booklet | August 19, 2009
Taxpayer resources
You may also seek assistance from a professional tax assistant at a Low Income
Taxpayer Clinic if you qualify. These clinics provide help to qualified taxpayers at little or
no charge. IRS Publication 4134, Low Income Taxpayer Clinic List, provides information
on clinics in your area and is available through the IRS website at www.irs.gov, by
phone at 1-800-TAX-FORM (1-800-829-3676), or at your local IRS office.
Instructions for
Form 656—July 2009
Page 1 of 7
What you need to know
What is a Request to Settle?
A Request to Settle is an agreement between you (the taxpayer) and the IRS that
settles a tax debt for less than the full amount owed. The program provides eligible
taxpayers with a path toward paying off their debt and getting a “fresh start.” The
ultimate goal is a compromise that suits the best interest of both the taxpayer and
the IRS.
Application process
The application process is time-intensive and will require you to provide a significant
amount of information about your finances, so make sure you meet all eligibility criteria
before you start. The Request to Settle application requires filling out the appropriate
forms and attaching an initial down payment, $150 application fee (waived if you meet
low-income guidelines), and photocopies of supporting documentation. Form 656 will
lead you through a series of steps to help you calculate a reasonable offer and tell us
about your assets, income, and expenses. You will have the opportunity to include a
narrative explanation of any special circumstances that impact your financial situation
(for example, advanced age, serious illness from which recovery is unlikely, anticipated
change in income, etc.). You must fill out all forms completely and include the required
supporting documentation.
Paying for your offer
Submitting an offer requires sending an initial down payment with your application,
which the IRS will apply to your tax debt (note that the IRS will keep your down
payment regardless of whether your application is returned, accepted, or rejected). The
amount of this down payment and subsequent payments will depend on your total
offer amount and which of the two following payment options you choose.
Payment option 1: Include 20% of the total offer amount as a down payment
and pay the remaining balance in five payments or fewer within the statute of
limitations.
Payment option 2: Pay in 24 monthly installments and include the first month’s
installment as the down payment. (An extended payment period may also be available.)
65
DRAFT—Wage Earners Booklet | August 19, 2009
To be considered, you must make an appropriate offer based on what the IRS considers
your true ability to pay. The offer is not a negotiation; it is a calculation based on your
assets, income, expenses, and future earning potential. The offer amount will depend on
what the calculations on Form 656 show you can afford to pay within the statute of
limitations. The statute is the time frame the IRS has to collect your unpaid taxes from
the date of assessment (usually 10 years). In most cases, the IRS won’t accept your
offer amount unless it is equal to or greater than the minimum offer amount calculated
on Form 656, though you may still apply if you can prove that you have special
circumstances that hinder your ability to pay the minimum amount. It’s important to
note that you are not a good candidate for the program if the calculations show you
have sufficient income and/or assets to pay the full amount of your tax debt (for
example, through a traditional IRS installment plan), and there are no serious special
circumstances preventing you from paying your tax debt.
Instructions for
Form 656—July 2009
Page 2 of 7
What you need to know — continued
Other important facts
• The Request to Settle is not an “amnesty” program. If accepted, you are expected to
pay the IRS the amount the calculation on Form 656 says you can afford. It’s likely
that you will have to obtain the funds by borrowing money from a bank or from
friends or family members, cashing out your retirement savings, liquidating other
assets.
• Not every taxpayer is a good candidate for this program.
• Submitting a Request to Settle is a time-intensive process.
• If accepted, the IRS will keep your next tax refund.
• Penalties and interest will continue to accrue during the application process.
• A Notice of Federal Tax Lien may be filed at any time while your offer is being
considered. Federal Tax Liens will not be released until you finish paying the offer
amount.
• If you are applying for a Request for Settle, you must complete all the returns you
were legally required to file to be officially accepted to the program. (If you did not
file a return for a specific year because you were not legally required to file the
return, then you must provide an explanation.)
Types of returns you may need to file:
—Income Tax
—Employment Tax
—Excise Tax returns
—Returns filed by single-owner Limited Liability Companies if you do not elect to
treat the LLC as a corporation
—Closely held corporations and partnerships
• You must continue to file tax returns and comply with your tax obligations for 5 years
after the offer is accepted, or the agreement is void and you will be responsible for
the full amount you owe.
Are you currently in an open bankruptcy proceeding?
Yes. If you are currently in a bankruptcy proceeding, you are not eligible to apply for
a Request to Settle. Any resolution of your outstanding tax liabilities generally must
take place within the context of your bankruptcy proceeding.
FF
FF
No. You are eligible to apply. Continue to learn more about the application process.
If you are not sure, call your local IRS insolvency office or the IRS toll-free number
(1-800-829-1040).
66
DRAFT—Wage Earners Booklet | August 19, 2009
Eligibility
Instructions for
Form 656—July 2009
Page 3 of 7
Gather documentation
To calculate an offer amount, you will need to gather information about your financial
situation, including cash and investments, assets, income, and expenses. Note that you
can calculate the offer using your most recent account information, but you will be
required to attach 3 months of statements/bills and other supporting documents.
If you are filing jointly with your spouse, you will need to provide assets and income
information for both of you. This is also the case if you have a domestic partner and
live in a state with communal property laws (Arizona, California, Idaho, Louisiana, New
Mexico, Nevada, Texas, Washington, and Wisconsin).
Look for the paperclip icons to see what documentation you need to attach to your
application.
Cash and investments
Gather the information below for each type of account/asset, such as checking, savings,
money market and online accounts, stored value cards (payroll or benefits cards),
investment and retirement accounts (IRAs, Keogh, 401(k) plans, stocks, bonds, mutual
funds, certificates of deposit), life insurance policies that have a cash value, and safe
deposit boxes.
• Past 3 months’ statements/bills for each account/asset
• If an asset is used as collateral on a loan: most recent statement from lenders on
loans, monthly payments, loan payoffs, and balances
• Fair Market Value valuation of contents of safe deposit boxes
Assets
Gather the information below for assets you own, such as real estate (houses, condos,
co-ops, etc.), vehicles (cars, boats, motorcycles, etc.), furniture and personal effects
(jewelry, clothing, accessories, etc.), collections (coins, guns, stamps, etc.), and any other
items of value (artwork, antiques, etc.).
• Most recent statement from lenders on loans, mortgages (including second
mortgages), monthly payments, loan payoffs, and balances
• Universal Commercial Code (UCC) financing statements and accountant’s depreciation
schedules, if applicable
• Fair Market Value valuations of your assets
• Make/Model/Year/Mileage of your vehicles
Income
Gather the information below for yourself, your spouse, and anyone else who
contributes to your household’s income.
• Past 3 months’ pay stubs, earnings statements, etc., from each employer
• If self-employed: past 3 months’ documentation of commissions, invoices, sales
records, etc.
• Past 3 months’ earnings statements, etc., from every other source of income (such as
pensions, Social Security, rental income, interest and dividends, child support,
alimony, rent subsidies, and other government or charitable financial assistance other
than Food Stamps)
67
DRAFT—Wage Earners Booklet | August 19, 2009
How to apply
Instructions for
Form 656—July 2009
Page 4 of 7
How to apply — continued
Gather documentation — continued
Expenses
Gather the information below about your average monthly expenses. The IRS limits
the type of expenses you can claim to those necessary to support your family’s health
and welfare, and the production of income. Expenses generally not allowed include
tuition for private schools, college expenses, charitable contributions, cable television,
and credit card payments and other unsecured debt payments.
T he IRS determines monthly expense guidelines for certain categories of monthly
expenses. Some of these amounts are based on national standards (e.g., food,
clothing, and out-of-pocket healthcare), while some are specific to your area (e.g.,
housing and utilities, vehicle ownership/lease, and vehicle operating costs).
If you list expenses that are higher than the IRS guideline amounts, you may be
required to provide supporting documentation such as statements, bills, receipts, or
other proof of payment.
Gather information about your average monthly expenses in the categories below:
• Housing (e.g., rent or mortgage payment, property taxes, home insurance,
maintenance, dues, and fees)
• Utilities (e.g., gas, electricity, water, fuel, oil, other fuels, trash collection, telephone,
and cell phone)
• Public transportation, vehicle ownership/lease, vehicle operating costs (e.g., loan
payments, maintenance, repairs, insurance, fuel, registrations, licenses, inspections,
parking, and tolls)
• Food, clothing, and miscellaneous
• Health insurance costs, out-of-pocket healthcare costs
• Child/Dependent care, court-ordered payments (child support, alimony, etc.)
• Life insurance premiums, taxes, other secured debts
On the Request to Settle form, you will also need to tell us whether you:
• Have had a previous bankruptcy filing, and if so, the date it was discharged
• Are a beneficiary of any trusts, estates, or life insurance policies
• Have transferred assets for less than their full value in the past 10 years
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DRAFT—Wage Earners Booklet | August 19, 2009
Other information
Instructions for
Form 656—July 2009
Page 5 of 7
Complete application package
1. Fill out forms
Fill out Form 656, Request to Settle. This form will lead you through a series of steps to
arrive at a reasonable offer consistent with your true ability to pay. In addition to
describing your assets, income, and expenses, you will include a narrative explanation
of any special circumstances.
Additional forms that may apply to you:
• Form 2848, Power of Attorney, if you would like your attorney, CPA, or enrolled agent
to represent you and discuss the offer with the IRS
• Form 656-PPV, Periodic Payment Voucher, if you are choosing the monthly
payment option
2. Attach required documentation
Compile photocopies of all required attachments and include them in your application
package.
Asset
• Past 3 months’ statements/bills for each account/asset
• If asset is used as collateral on a loan: most recent statement from lenders on loans,
monthly payments, loan payoffs, and balances
• Most recent statement from lenders on loans, mortgages (including second
mortgages), monthly payments, loan payoffs, and balances
• Universal Commercial Code (UCC) financing statements and accountant’s depreciation
schedules, if applicable
• Past 3 months’ pay stubs, earnings statements, etc., from each employer
• Past 3 months’ earnings statements, etc., from every other source of income (such as
pensions, Social Security, rental income, interest and dividends, child support,
alimony, rent subsidies, and other government or charitable financial assistance other
than Food Stamps)
• If self-employed: past 3 months’ documentation of commissions, invoices, sales
records, etc.
Write a check or money order for the initial down payment, based on the payment
option you selected (20% of offer amount or first month’s installment). Make the check
or money order payable to “United States Treasury.”
4. Include a check for the $150 application fee (waived if you qualify for Low Income Guidelines on pg. 4 of the form)
Write a check or money order for the application fee ($150) or, if you meet the Low
Income Guidelines, complete Low Income Certification section on pg. 4 of the form.
Make the check or money order payable to “United States Treasury.”
69
DRAFT—Wage Earners Booklet | August 19, 2009
3. Include initial down payment (waived if you qualify for Low Income Guidelines on pg. 4 of the form)
Instructions for
Form 656—July 2009
Page 6 of 7
How to apply — continued
5. Submit application package
Mail application package to the appropriate IRS facility
• Make a copy of your compete application package and keep for your records
• Mail the application package via Certified Mail to the appropriate IRS processing
office for your state. The IRS will acknowledge receipt once your package arrives.
If your state of residence is:
AK, AL, AZ, CA, CO, HI, ID, KY, LA, MS,
MO, NV, NM, OR, TN, TX, UT, WA, WI, WY
AR, CT, DE, DC, FL, GA, IL, IN, IA, KS, ME,
MD, MA, MI, MN, MO, NE, NH, NJ, NY,
NC, ND, OH, OK, PA, PR, RI, SC, SD, VT,
VA, WV, or a foreign address
Mail your application to:
Memphis IRS Center COTS Unit
P.O. Box 30803, AMC
Memphis, TN 38130-0803
Brookhaven IRS Center COTS Unit
P.O. Box 9007
Holtsville, NY 11742-9007
After you submit, remember to:
• Continue making payments on your existing IRS installment plan or partial payment
offer, if applicable
• File all tax returns you are legally required to file
• Reply to IRS requests for additional information within the timeframe specified
• Save copies of all bills, statements, pay stubs, etc., for all your assets, income, and
expenses in case you need them later
Our purpose for requesting the information is to determine if it is in the best interests of the IRS to
accept a Request to Settle. You are not required to make a Request to Settle; however, if you choose to
do so, you must provide all the taxpayer information requested. Failure to provide all the information
may prevent us from processing your request.
If you are a paid preparer and you prepared the Form 656 for the taxpayer submitting an offer, we
request that you complete and sign Paid Preparer section on pg. 6 of Form 656, and provide identifying
information. Providing this information is voluntary. This information will be used to administer and
enforce the Internal Revenue laws of the United States and may be used to regulate practice before
the Internal Revenue Service for those persons subject to Treasury Department Circular No. 230,
Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled
Actuaries, and Appraisers before the Internal Revenue Service. Information on this form may be
disclosed to the Department of Justice for civil and criminal litigation.
We may also disclose this information to cities, states, and the District of Columbia for use in
administering their tax laws and to combat terrorism. Providing false or fraudulent information on this
form may subject you to criminal prosecution and penalties.
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DRAFT—Wage Earners Booklet | August 19, 2009
Privacy Act Statement
We ask for the information on this form to carry out the Internal Revenue laws of the United States. Our
authority to request this information is Section 7801 of the Internal Revenue Code.
Instructions for
Form 656—July 2009
Page 7 of 7
Review the entire application and verify that it is complete. Here are some things to
look for:
Form 656
FFDid you complete all fields and sign the application? If a field doesn’t apply to
you, write “N/A.”
FFDid you complete the “Explain your financial situation” section on pg. 2 of the
form?
FFDid you make an offer amount that is greater than or equal to the minimum offer
calculated on pg. 3 of the form? If not, did you describe why you are offering less
than the minimum in the “Explain your financial situation” section and provide
supporting documentation proving this is the most you can afford?
FFDid you select a payment option on pg. 4 of the form?
FFIf filing jointly with your spouse or if you live in a state with communal property
laws, did you provide documentation of assets for both spouses? Did both
spouses sign the form and provide correct Social Security numbers?
FFIf you want to allow the IRS to discuss your Request to Settle with a friend,
family member, or anyone else, did you complete the “Third-Party Designee”
section on pg. 4 of the form?
FF If a paid preparer completed the form, did they sign on pg. 8 of the form?
Supporting documentation and additional forms
FF Did you include photocopies of all required supporting documentation?
FFDid you attach Form 2848, Power of Attorney (if applicable)?
FFDid you attach 656-PPV, Periodic Payment Voucher (if applicable)?
Payment
FFDid you include a check or money order for the initial down payment?
(Waived for Low-Income Certification—see pg. 4 of the form.)
FFDid you include a check or money order for the $150 application fee?
(Waived for Low-Income Certification—see pg. 4 of the form.)
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DRAFT—Wage Earners Booklet | August 19, 2009
Application Checklist
Form 656—July 2009
Page 1 of 8
IRS
Department of the Treasury
Internal Revenue Service
Form 656
For Wage Earners and Self-Employed Individuals
Request to Settle Tax Debt
By submitting a Request to Settle, you (the taxpayer) ask the IRS to consider accepting less than the full amount you
owe. This form will lead you through a series of steps to calculate an offer based on your assets, income, expenses,
and future earning potential. You will have the opportunity to explain any special circumstances that affect your
financial situation.
This form requires a significant amount of information about your finances, so before you begin, make sure you
gather the necessary documentation (see instruction booklet). Please note: If you are currently in a bankruptcy
proceeding, you are not eligible to apply for a Request to Settle. If you have questions, please call our toll-free
number at 1–800–829–1040.
Submitting this application does not ensure that the IRS will accept your offer. It begins a process of evaluation and
verification during which the IRS will follow established calculations to determine your ability to pay.
Keep in mind that to complete the application package, you’ll need to attach supporting
documentation including account statements, pay stubs, monthly bills, etc.
Personal and Household Information
Last name ______________________________________________________________________ First name ________________________________________________________________________________________________________________
Date of birth ___________________________________________________________________ Social Security number _________________________________________ Marital status Married Unmarried
Home address (street, city, state, ZIP code) ___________________________________________________________________________________________________________________________________________________________________
Primary phone ________________________________________________________________ Secondary phone _______________________________________________ Best time to call ____________ am pm
Mailing address (if different) __________________________________________________________________________________________________________________________________________________________________________________
Employer’s name ______________________________________________________________ Occupation _______________________________________________________________________________________________________________
Address (street, city, state, ZIP code) _________________________________________________________________________________________________________________________________________________________________________
Provide information about your spouse
Spouse’s last name ____________________________________________________________ First name ________________________________________________________________________________________________________________
Date of birth ___________________________________________________________________ Social Security number __________________________________________________________________________________________________
Employer’s name ______________________________________________________________ Occupation _______________________________________________________________________________________________________________
Address (street, city, state, ZIP code) _________________________________________________________________________________________________________________________________________________________________________
Provide information for all dependents in the household
Age
Relationship to taxpayer Contributes to household income?
Yes
Yes
Yes
Yes
No
No
No
No
Your Tax Debt
Years for which you owe taxes, penalties, and interest _______________________ Amount you owe $ _______________________
Optional. Tell us if you want to apply your initial down payment to a specific tax year. For example, you may want to
apply your down payment to the oldest debt or the debt with highest interest. You can also choose to send in more
than the 20% initial down payment and apply the overage to a specific tax year. If you do not designate a preference,
we will apply any money you send to your oldest debt first.
I want to apply my down payment to my debt from year _______________________
I am sending more than the required down payment, and want the overage applied to my debt from year _______________________
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OIC worksheet | Option C | August 19, 2009
Name
Form 656—July 2009
Page 2 of 8
Explain Your Financial Situation
The IRS understands that there are unplanned events or special circumstances, such as serious illness from which
recovery is unlikely, or advanced age, where paying the minimum offer amount might impair your ability to provide
for yourself and your family. If this is the case and you can provide supporting documentation to prove your situation,
then your offer may be accepted despite your financial profile. Describe your situation below and attach appropriate
documents. Attach additional sheets if necessary.
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OIC worksheet | Option C | August 19, 2009
Explanation of circumstance resulting in economic hardship from payment of tax debt in full
Form 656—July 2009
Page 3 of 8
Your Financial Situation
Calculate your minimum offer below. If a total results in a negative number, enter “0.”
Cash and Investments
Available Monthly Income
1. List the amount available in each of the following:
7. Enter your household’s average monthly income
Bank accounts (checking, savings,
money markets, online accounts) . . . . . . . . . . . . . . . . . . . $ ________________________
Payroll or benefit cards . . . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Cash on hand and value of safe deposit items . . . . . + $ ________________________
Investment accounts (stocks, bonds, etc.) . . . . . . . . . . + $ ________________________
Retirement accounts (401ks, IRAs, etc.)
(The IRS is aware that you may be charged penalties and income tax when you
withdraw funds from certain types of accounts based on your age and other
factors) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Cash value of life insurance policies . . . . . . . . . . . . . . + $ ________________________
If self-employed: cash and investments
from business (see pg. 6) . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Total Cash and Investments . . . . . . . . . . . . . . . . . = $
Primary taxpayer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ________________________
Check if this includes pension or Social Security income
Assets
2. Real estate (houses, condos, co-ops)
Monthly Expenses
Fair market value $ ____________________________________ x .8 $ ________________________
Total loan balance (mortgages, etc.) . . . . . . . . . . . . . – $ ________________________
Total value of real estate . . . . . . . . . . . . . . . . . . . = $ ________________________
8. Enter your monthly expenses. Please note the IRS has standardized
guidelines for lines a–f that you may use if you don’t have proof of
expenses in these categories (see pg. 6). Note that if you list expenses
that are higher than the IRS guideline amounts, you may be required to
provide supporting documentation.
3. Vehicles (cars, boats, motorcycles)
Fair market value $ ____________________________________ x .8 $ ________________________
Loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – $ ________________________
Total value of vehicles . . . . . . . . . . . . . . . . . . . . . = $ ________________________
a. Food, clothing, and miscellaneous . . . . . . . . . . . . . . .
b. Housing and utilities . . . . . . . . . . . . . . . . . . . . . . . +
c. Vehicle ownership/lease costs . . . . . . . . . . . . . . . +
d. Vehicle operating costs . . . . . . . . . . . . . . . . . . . . . +
e. Public transportation . . . . . . . . . . . . . . . . . . . . . . . +
f. Out-of-pocket healthcare costs . . . . . . . . . . . . . . . . +
g. Health insurance . . . . . . . . . . . . . . .
+
h. Court-ordered payments . . . . . . . . . . . . . . . . . . . . +
i. Child/Dependent care . . . . . . . .. . . . . . . . . . . . . . . +
j. Life insurance premiums . . . . . . . . . . . . . . . . . . . . +
k. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
l. Other secured debts (not mortgage,
credit card, or car payments) . . . . . . . . . . . . . . . . . +
Total Average Monthly Expenses . . . . . . . . . . . . =
4. Personal effects (furniture, jewelry, clothing, accessories)
Fair market value $ ____________________________________ x .8 $ ________________________
Loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – $ ________________________
IRS allowed deduction . . . . . . . . . . . . . . . . . . . . . . . . – $8,320
Total value of personal effects . . . . . . . . . . . . . . = $ ________________________
5. Valuable items (artwork, collections)
Fair market value $ ____________________________________ x .8 $ ________________________
Loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – $ ________________________
Total of valuable items . . . . . . . . . . . . . . . . . . . . . = $ ________________________
6. If self-employed: business assets, books, and tools
Cash and investments from business (see pg. 6) $ ________________________
Fair market value $ ____________________________________ x .8 $ ________________________
Loan balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – $ ________________________
IRS allowed deduction . . . . . . . . . . . . . . . . . . . . . . . . – $6,000
Total of business assets . . . . . . . . . . . . . . . . . . . . . = $ ________________________
Remaining Monthly Income . . . . . . . . . . . $ _______________________________________
Multiply Remaining Monthly Income
by 48 months to get Future Remaining Income.
Add Total Cash and Investments to Total Value of Assets to get Total
Available Funds.
$
=
$ ________________________
$ ________________________
Subtract Total Average Monthly Expenses from Total Available Monthly
Income to get Remaining Monthly Income.
Add up the totals of 2–6.
Total Value of Assets . . . . . . . . . . . . . . . . . . . . . . . . = $
Total Available Funds
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
$ ________________________
+
Minimum Offer Amount
x 48 months
Future Remaining Income $
$
The result is the least amount of money that you can offer the IRS to settle
your debt. This can be paid over time; continue to the next page to select a
payment option.
74
OIC worksheet | Option C | August 19, 2009
Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ________________________
Check if this includes pension or Social Security income
Interest and dividends . . . . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Rental income generated by
your real estate properties . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Child support you receive . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Alimony you receive . . . . . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Rent subsidies, other financial support
(not food stamps). . . . . . . . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Additional household income . . . . . . . . . . . . . . . . . . . . + $ ________________________
If self-employed: Net Income from business
(see pg. 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + $ ________________________
Total Available Monthly Income . . . . . . . . . . . . . = $ ________________________
Form 656—July 2009
Page 4 of 8
Low-Income Certification
Do you qualify for Low-Income Certification? You qualify if your monthly income is less than or equal to the
amount indicated in the chart below based on your family size and where you live. If you qualify, you are not required
to submit an application fee or initial down payment, though you must still demonstrate that you will be able to pay
the offer amount using one of the payment options.
Check here if you qualify for Low-Income Certification based on the monthly income guidelines below.
Size of family unit
1
2
3
4
5
6
7
8
For each additional person, add
48 Contiguous
States and D.C.
Hawaii
Alaska
$2,256
$3,035
$3,815
$4,594
$5,373
$6,152
$6,931
$7,710
$798
$2,596
$3,492
$4,388
$5,283
$6,179
$7,075
$7,971
$8,867
$896
$2,819
$3,794
$4,769
$5,744
$6,719
$7,694
$8,669
$9,644
$975
Payment Options
Will you pay for the offer in five or fewer payments (Option 1) or in monthly installments (Option 2)?
In general, paying over a shorter period of time is good for you, as you’ll pay less in interest charges.
Payment Option 1
Check here if you will:
– Pay in 5 or fewer payments
– Enclose a check for at least 20% of the offer amount as
a down payment (waived for Low-Income Certification)
Fill in the amount of your 20% down payment (waived for
Low-Income Certification) and the amounts and dates when you
plan on paying your future payments.
Date
Date
Date
Date
Date
________________________
________________________
________________________
________________________
Divide the Minimum Offer Amount by 24 months to calculate
your monthly installment amount. This will also be the amount of
your down payment (waived for Low-Income Certification).
Minimum offer amount . . . . . . . . . . . . . . .. . . . . . . . . . . . . $ ________________________
÷ 24 months
Amount of monthly installment . . . . . . . . . . . . . . . . . . = $ ________________________
________________________
If you absolutely cannot pay off the minimum offer amount
within 24 months, you may propose monthly installments based
on the number of months remaining on the statute of limitations
for your debt. Call the IRS at 1-800-829-1040 to determine how
much collection time remains under the statute.
Minimum offer amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ________________________
Months remaining on statute . . . . . . . . . . . . . . . . . . . ÷ ________________________
Amount of monthly installment . . . . . . . . . . . . . . . . . . . = $ ________________________
75
OIC worksheet | Option C | August 19, 2009
Amount of down payment $ ________________________
(Waived for Low-Income Certification)
Amount of payment 1 . . . . $ ________________________
Amount of payment 2 . . . . $ ________________________
Amount of payment 3 . . . . $ ________________________
Amount of payment 4 . . . . $ ________________________
Amount of payment 5 . . . . $ ________________________
Minimum offer amount $ ________________________
Payment Option 2
Check here if you will:
– Pay in monthly installments within 24 months (or the
number of months remaining on the statute of limitations)
– Enclose a check for one month’s installment as a down
payment based on the payment time frame below (waived for
Low-Income Certification)
Form 656—July 2009
Page 5 of 8
Source of funds
Tell us where you will obtain the funds to pay for your offer. (You may consider borrowing from friends or family,
taking out a loan, or selling assets.)
Name
Relationship to you
___________________________________________________________________________
________________________________________________
Amount $ _____________________________________
Additional Financial Information the IRS Needs to Consider Your Offer
1. Have you ever filed for bankruptcy?
Yes
No
If yes, date bankruptcy was discharged: _________________________________
2. Are you the beneficiary of a trust, estate, or life insurance policy?
3. Have you been party to a lawsuit?
4. In the past 10 years, have you transferred any assets for less than their full value?
5. Have you lived outside the U.S. for 6 months or longer in the past 10 years?
Yes
No
Yes
No
Yes
No
Yes
No
Asset Details
Provide details for the assets you own and reported on page 2 (be complete).
Real estate 1
Location (street, city, state, ZIP, county)
Property description
This is my primary residence Yes No
If you are a landlord, monthly rent you charge $ _____________________________________
Real estate 2
Location (street, city, state, ZIP, county)
Property description
This is my primary residence Yes No
If you are a landlord, monthly rent you charge $ _____________________________________
Provide the information requested for all personal vehicles you own, including cars, boats, motorcycles, etc. Indicate
the vehicles your household relies on for your monthly income (i.e., if you can’t get to and from work by other means,
or you use it to perform your job).
Vehicle 1
Location (street, city, state, ZIP, county)
Lease or loan start date ________________________________________________________ Lease or loan end date ________________________________________________________
My household relies on this vehicle for income Yes No
Monthly lease or loan amount $ _____________________________________
Monthly lease or loan amount $ _____________________________________
About Federal Tax Liens. The IRS may file a Notice of Federal Tax Lien against your assets until the tax liabilities
are paid. If we file a Tax Lien, we have a legal claim to your assets and have the right to take ownership of them. If
the Tax Lien is in place, you will not be able to sell or borrow against your property. Tax Liens are released once the
tax liabilities are paid.
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OIC worksheet | Option C | August 19, 2009
Vehicle 2
Location (street, city, state, ZIP, county)
Leaseholder, address, phone
Lease or loan start date _______________________________________________________ Lease or loan end date
My household relies on this vehicle for income Yes No
Form 656—July 2009
Page 6 of 8
IRS Monthly Expense Guidelines
The IRS determines guidelines for certain categories of monthly expenses. Some of these guidelines are based on
national standards (e.g., food, clothing, and out-of-pocket healthcare), while some are specific to your area (e.g.,
housing and utilities, vehicle ownership/lease, and vehicle operating costs).
Enter the IRS guideline amounts for lines a–f, based on your family size. For lines a and f, consult the tables provided;
for lines b–e, visit www.irs.gov/financial_standards to get guidelines for your area.
Once you’ve filled in lines a–f, transfer the amounts to the calculations on page 3.
a.
b.
c.
d.
e.
f.
Description
Food, clothing, and miscellaneous . . . . . . . . . . . . . . . . . .
Housing and utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicle ownership/Lease costs . . . . . . . . . . . . . . . . . . . . .
Vehicle operating costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Public transportation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Out-of-pocket healthcare costs . . . . . . . . . . . . . . . . . . .
IRS monthly expense guidelines for
food, clothing, and miscellaneous
Expenses
IRS guideline amount
$ ______________________________________
$ ______________________________________
$ ______________________________________
$ ______________________________________
$ ______________________________________
$ ______________________________________
One person
$517
Two people
$985
Three people
$1,152
Four people
$1,370
For each additional person add $262 to the total amount.
IRS monthly expense guidelines for
out-of-pocket healthcare costs
Under 65
65 and older
Each person
$60
$144
Self-Employed Information
Complete this section if you or your spouse is self-employed.
Is your business a sole proprietorship (filing Schedule C)? If Yes, continue. If No, complete Form 656-B (Offer to Settle
Business Tax Debt).
Name of business _______________________________________________________________________________________________________________________________________________________________________________________________
Address of business _____________________________________________________________________________________________________________________________________________________________________________________________
Business website ___________________________________________________________________________________________ Employer Identification Number ____________________________________________________________
Type of business ____________________________________________________________________________________________ Federal contractor Yes No
Total number of employees ________________________________________________________________________________ Frequency of tax deposits ___________________________________________________________________
Average gross monthly payroll $ _________________________________________________________________________ Accounting method cash accrual
__________________________________________________________________________
__________________________________________________________________________
Processor account number
Processor account number
Credit cards your business accepts
Name ________________________________________________________________________________________________________ Merchant account number
Name ________________________________________________________________________________________________________ Merchant account number
Name ________________________________________________________________________________________________________ Merchant account number
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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OIC worksheet | Option C | August 19, 2009
Internet sales
Payment processor (PayPal, etc.)
Payment processor (PayPal, etc.)
Form 656—July 2009
Page 7 of 8
Self-Employed Financial Information
Cash and Investments from Business
Monthly Income from Business
1. List the amount available in each of the following:
2. List monthly income from the following sources:
Bank accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Business cash on hand . . . . . . . . . . . . . . . . . . . . . . . . + $
Total Cash and Investments
from Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . = $
Transfer Total Cash and Investments from Business to page 2.
Do you have accounts/notes receivable? If yes, attach a separate sheet of
paper listing each account separately, including contracts awarded but not
yet started. Include e-payment accounts receivable and factoring
companies and any bartering or online auction accounts. Include Federal
Government Accounts. For each, provide:
Gross receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross rental income . . . . . . . . . . . . . . . . . . . . . . . . . . +
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Total Average Monthly Income . . . . . . . . . . . . . . =
$
$
$
$
$
$
$
Monthly Expenses from Business
3. List your average monthly expenses:
Materials and inventory purchased . . . . . . . . . . . . . . . .
Name
Gross wages and salaries . . . . . . . . . . . . . . . . . . . . . . +
Address
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Amount due $ _________________________________
Date due ____________________________
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Age of account
0–30 days
30–60 days
60–90 days
over 90 days
Utilities/Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Vehicle (gasoline, oil, repairs, maintenance) . . . . . . . +
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Current taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +
Total Average Monthly Expenses . . . . . . . . . . . . =
$
$
$
$
$
$
$
$
$
$
Subtract your Total Monthly Expenses from your Total Monthly
Income to get your Net Income from Business.
Net Income from Business . . . . . . . . . . . . . . . = $
The amount you earn after you pay monthly business expenses. If it
is a loss, enter “0,” not a negative number.
Transfer Net Income from Business to page 2.
Terms, Conditions, and Legal Agreement
In the following agreement, the pronoun “we” may be assumed in place of “I” when there are joint
liabilities and both parties are signing this Agreement.
I request that the IRS accept a compromise offer as payment of outstanding tax liabilities (including interest,
penalties, and any additional amounts required by law). I agree to the following conditions:
The IRS will keep any future refund, including interest, that I might be due for tax periods extending through the
calendar year in which the IRS accepts my compromise offer. I also cannot designate that the refund be applied to
estimated tax payments for the following year. If I receive a refund after I submit this offer and while it is being
processed, I will return the refund to the IRS.
The IRS will keep any monies it has collected prior to this offer and any payments that I make relating to this offer
that I did not designate as a deposit. If the IRS puts a levy against my assets prior to my submitting this offer and
receives money based on the levy while this offer is pending, the IRS will keep that money.
Pending status of an offer and right to appeal. Once an authorized IRS official signs this form, my offer is
considered pending as of that signature date and remains so until it is officially accepted, rejected, returned, or I
withdraw the offer in writing. If the IRS rejects my offer, I have 30 days to request a hearing before the Appeals
Office. If I appeal the offer, the offer remains pending until the Appeals Office rules.
78
OIC worksheet | Option C | August 19, 2009
IRS keeps payments, fees, and some refunds. I voluntarily submit the payments made on this offer and
understand that they are not refundable even if I withdraw the offer or the IRS rejects the offer.
Unless you designate how the required payment should be applied, the IRS will apply your payment in the best
interest of the government, choosing which tax years and tax liabilities to pay off. The IRS will also keep your
application fee unless the offer is not accepted for processing.
Form 656—July 2009
Page 8 of 8
Terms, Conditions, and Legal Agreement—continued
Future obligations. I must remain in compliance in the future and I remain liable for the full tax
liability until all terms and conditions of this offer have been met. I will file tax returns and pay required
taxes for the next 5 years or until my offer is paid in full, whichever is longer. If this is an offer being submitted for
joint liabilities, and one of us does not comply with future obligations, only the non-compliant taxpayer will be in
default of this agreement.
The IRS will not remove the original amount of my tax liability from its records until I have met all the terms and
conditions of this offer. If I file for bankruptcy before the terms of the offer are fully met, any claim the IRS files in the
bankruptcy proceedings will be a tax claim.
Once the IRS accepts my offer in writing, I have no right to contest, in court or otherwise, the amount of the liability.
Failing to meet terms of the offer (defaulting). If I fail to meet any of the terms of this offer, the IRS may
immediately file suit to collect any amount ranging from the unpaid balance of the offer to the original amount of the
liability without further notice of any kind. The IRS will continue to add interest, as Section 6601 of the Internal
Revenue Code requires, on the amount the IRS determines is due after default. The IRS will add interest from the date
I default on the offer until I completely satisfy the amount owed.
Agreeing to waive time limits provided by law. To have my offer considered, I understand that I agree to
suspend the time limit provided by law for the IRS to collect my tax liability (called a statutory period of limitation).
[INSERT TERMS L,M,N,O FROM 656]
Signatures
Under penalties of perjury, I declare that I have examined this offer, including accompanying
documents, and to the best of my knowledge it is true, correct, and complete.
Signature of taxpayer
__________________________________________________________________________________
Date
_______________________________________________
Signature of taxpayer
__________________________________________________________________________________
Date
_______________________________________________
Write separate checks for the down payment and application fee ( waived for Low-Income Certification)
Make payable to the “United States Treasury” and attach to the front of your Form 656, Offer to Settle Tax
Debt. Do not send cash. Send a separate application fee with each offer; do not combine it with any other
tax payments, as this may delay processing of your offer. Your offer will be returned to you if the application
fee and the required payments are not properly remitted, or if your check is returned for insufficient funds.
Application Prepared by Someone Other than the Taxpayer. If this application was prepared by someone
other than the taxpayer, please fill in that person’s name and address below. Check box, sign, and provide an ID
number if the person is a paid preparer.
Signature of preparer ________________________________________________________________________________________________________________________________________________
Name of preparer __________________________________________________________________________________________ Date ________________________________________________
Address (street, city, state, ZIP code) _______________________________________________________________________________________________________________________________
Check if paid preparer
Paid preparer’s CAF or PTIN number
_______________________________________________________________
Self-employed? Yes No
Third-Party Designee
Do you want to allow another person to discuss this offer with the IRS? Yes No
If yes, provide designee’s name ___________________________________________________________________________ Phone
_____________________________________________
IRS Use Only
I accept the waiver of the statutory period of limitations on assessment for the Internal Revenue Service.
Signature of Authorized IRS Official ______________________________________________________________________________________________________________________________
Title __________________________________________________________________________________________________________ Date _______________________________________________
79
OIC worksheet | Option C | August 19, 2009
OIC FOCUS GROUP DISCUSSION GUIDE
INTRO TO GROUPS –10 MINUTES
(0:00-0:10)
SET GROUP EXPECTATIONS
+
Ask if anyone has participated in focus groups before
+
Explain there is a two way mirror and clients are watching, taking notes, etc.
+
Tell them that they are being recorded
+
Explain that what they say in the room will not be used anywhere other than for client
reporting purposes
+
State how long the groups will last
FOCUS GROUP GROUND RULES
+
Turn off cell phones
+
Give everyone a chance to participate
+
Speak one at a time
+
Stress that there are no wrong answers…that we are conducting the groups to evaluate
the forms and not the individual
+
Encourage them to ask questions if they don’t understand something
+
We’re interested in their opinions, not what anyone else might think (not their mother,
daughter, friends, etc.)
GROUP INTRODUCTIONS/WARM-UP
Ask people to take a few minutes and write down a few words or phrases that they would use to
describe their perception of the OIC form.
+
Name
+
Where from
+
Read aloud words/phrases
OIC FORM PROCESS–15 MINUTES
(0:10-0:25)
How did you go about completing these forms? (PROBE)
80
+
Did you seek help?
+
Did you do it alone?
+
Did you do it over several days or in one sitting?
How long did it take to complete the forms? (PROBE)
+
Why were some people able to complete it faster than others?
+
Were people distracted?
+
Did they give it an honest attempt and get frustrated?
In a real–world situation, if you had to fill out these forms, would you do it yourself or would
you pay for professional help? (PROBE)
OIC PROBLEM AREAS–20 MINUTES
(0:25-0:45)
As part of the take–home exercise, we have asked respondents to place stickers on their OIC forms
to indicate areas that were especially confusing or difficult to complete.
As part of the group exercise, we will ask participants to review their forms, focusing on areas
where they have placed stickers.
Each person will be given the opportunity to introduce and discuss one or two problem areas and
together, we will make suggestions for improvement.
81
COMPLETING THE OIC FORMS–30 MINUTES
(0:45-1:15)
In the next 30 minutes we will be reviewing the OIC forms that you completed. Once again,
remember that we are not evaluating you or your ability to complete these forms, but rather
the forms themselves.
For each section we will look at the following:
+
Did the person get the right answer?
+
Was it easy to complete or difficult?
+
How long did it take to complete the section?
+
What would have made each section easier for you?
SIMPLICITY ELEMENTS–15 MINUTES
(1:15-1:30)
(OPTIONAL–IF NECESSARY)
I would like to take the next few minutes to review your simplicity score sheets that filled out
at home.
Proceed through each simplicity element. Read each one aloud. Ask respondents to raise their
hand if they rated an element as a 1 or 2, indicating that the form did not communicate the element.
Tally responses on an easel or computer. After we have reviewed all simplicity elements, we will
discuss those elements that seemed to be worse than others.
+
Why did the respondents feel the way they did?
+
What suggestions do they have for improvement?
82
EVALUATING ALTERNATE FORM–25 MINUTES
(1:30-1:55)
Finally, I would like to get your impressions on an alternate form. Please take the next 10
minutes to review this form, and I will return to discuss this with you and wrap things up.
Pass out new form and ask respondents to write down initial impressions on piece of paper.
+
Go around the room and have respondents read aloud their initial impressions of
alternate form
+
Do you think this form is better or worse than the one you filled out at home?
+
What exactly made it better or worse?
+
Would you be more or less likely to complete this form on your own or seek
professional help?
+
Quick vote on simplicity elements by a show of hands.
WRAP-UP–5 MINUTES
+
(1:55-2:00)
Q&A. Thank and close
83
| File Type | application/pdf |
| File Title | Office of Management and Budget Clearance Package |
| Author | MITRE |
| File Modified | 2009-09-14 |
| File Created | 2009-08-20 |