Fillable Form 656 (2021)

What is Form 656?

Form 656, Offer in Compromise, is a form used by taxpayers to offer to compromise the tax liabilities including any interest, penalties, additions to tax, and additional amounts required by the law with the Internal Revenue Service (IRS).

How to fill out Form 656?

Applicants can download and print a PDF copy of Form 656 from the Internal Revenue Service (IRS) website that they can manually complete. They can also fill it out electronically on PDFRun.

To fill out Form 656, you must provide the following information:

Usage of Pre-Qualifier Tool

Mark YES if you used the Pre-Qualifier Tool located on the Internal Revenue Service (IRS) website prior to filling out this form; otherwise, mark NO.

Section 1. Individual Information

First Name

Enter your legal first name.

Middle Initial

Enter your legal middle initial.

Last Name

Enter your legal last name.

Social Security Number (SSN)

Enter your social security number (SSN).

Spouse’s First Name

Have your spouse enter his or her legal first name.

Spouse’s Middle Initial

Have your spouse enter his or her legal middle initial.

Spouse’s Last Name

Have your spouse enter his or her legal last name.

Spouse’s Social Security Number (SSN)

Have your spouse enter his or her social security number (SSN).

Home Physical Address

Enter your home physical address including your street, city, state, ZIP code, and county of residence.

Home Mailing Address

Enter your home mailing address or post office box number if it is different from your home physical address.

New Address

Mark YES if the address you entered is a new address; otherwise, mark NO.

Record Updates

Mark YES if you would like the Internal Revenue Service (IRS) to update their records to your new address; otherwise, mark NO.

Employer Identification Number (EIN)

Enter your employer identification number (EIN).

Individual Tax Periods

Mark the appropriate boxes which correspond to the individual tax periods that apply to you. You may select:

• 1040 Income Tax-Years

• Trust Fund Recovery Penalty as a responsible person of (business name) for failure to pay withholding and Federal Insurance Contributions Act taxes for periods ending - Enter your business name and the periods when you have failed to pay withholding and Federal Insurance Contributions Act taxes.

• 941 Employer’s Quarterly Federal Tax Return - Quarterly periods

• 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return - Years

• Other Federal Taxes - Enter the other types of your federal taxes and each of their periods.

If you need more space, you may use an attachment and entitle it “Attachment to Form 656 dated (current date)” along with your signature.

Low Income Certification

By marking one of the boxes, you hereby certify that your adjusted gross income or your household’s gross monthly income x 12 and size of your daily qualify you for the Low Income Certification.

Mark the appropriate box which corresponds to your adjusted gross income or your household’s gross monthly income. You may select:

• I qualify for the low income certification because my adjusted gross income for my household’s size is equal to or less than the amount shown in the table below.
• I qualify for the low income certification because my household’s size and gross monthly income x 12 is equal to or less than the income shown in the table below.

If you qualify for the Low Income Certification, do not include any payments with your offer. However, if you decide to send in money and you have marked the Low Income Certification, you must mark one of the following boxes:

• Payment - By checking this box, I am requesting all money to be applied to my tax debt.
• Deposit - By checking this box, I am requesting all money to be treated as a deposit. If my offer is not accepted, I request my deposit to be applied to my tax liability. Failure to initialize my deposit will result in a refund of the deposit amount.

Failure to mark either of the boxes or marking both boxes will result in all payments being applied to your tax debt and will not be returned to you. You do not have to complete Section 4 of this form if you have marked the deposit section.

Section 2. Business Information

Complete this section if your business is that of a Corporation, Partnership, Limited Liability Company (LLC), or Limited Liability Partnership (LLP) and you want to compromise your tax debts.

Business Name

Enter your business name.

Business Physical Address

Enter the physical address of your business.

Street

Enter your street.

City

Enter your city.

State

Enter your state.

ZIP Code

Enter your ZIP code.

Business Mailing Address

Enter the mailing address of your business.

Street

Enter your street.

City

Enter your city.

State

Enter your state.

ZIP Code

Enter your ZIP code.

Employer Identification Number (EIN)

Enter your employer identification number (EIN).

Name and Title of Primary Contact

Enter the full legal name and title of your primary contact.

Telephone Number

Enter the telephone number of your business.

Business Tax Periods

Mark the appropriate box which corresponds to your type of Business Tax Periods. You may select:

• 1120 Income Tax-Years

• 941 Employer’s Quarterly Federal Tax Return - Quarterly periods

• 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return - Years

• Other Federal Taxes - Enter the other types of your federal taxes and each of their periods.

If you need more space, you may use an attachment and entitle it “Attachment to Form 656 dated (current date)” along with your signature.

Section 3. Reason for Offer

Mark the appropriate box which corresponds to the reason for your offer. You may select:

• • Doubt as to Collectibility - I do not have enough in assets and income to pay the full amount.
  • Exceptional Circumstances (Effective Tax Administration) - I owe this amount and have enough in assets and income to pay the full amount but due to my exceptional circumstances, requiring full payment would cause an economic hardship or collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner. I am submitting the written narrative below explaining my circumstances.

• Explanation of Circumstances - The IRS understands that there are unplanned events or special circumstances such as serious illness, where paying the full amount or the minimum offer amount might impair your ability to provide for yourself and your family. If this is the case and you can provide documentation to prove your situation, then your offer may be accepted despite your financial profile. If applicable, describe your special circumstances below and attach appropriate documents to this offer application.

Section 4. Payment Terms

Lump Sum Cash

Mark the box if you will pay your offer in 5 or fewer payments within 5 or fewer months from the date of acceptance.

Total Offer Amount

Enter your total offer amount in U.S. dollars.

20% Initial Payment

Enter your 20% initial payment in U.S. dollars.

Remaining Balance

Enter your remaining balance in U.S. dollars.

You may pay the remaining balance in one payment after acceptance of the offer or up to five payments, but cannot exceed 5 months.

Amount of Payment Payable Within 1 Month After Acceptance

Enter the amount of payment payable within 1 month after acceptance in U.S. dollars.

Amount of Payment Payable Within 2 Months After Acceptance

Enter the amount of payment payable within 2 months after acceptance in U.S. dollars.

Amount of Payment Payable Within 3 Months After Acceptance

Enter the amount of payment payable within 3 months after acceptance in U.S. dollars.

Amount of Payment Payable Within 4 Months After Acceptance

Enter the amount of payment payable within 4 months after acceptance in U.S. dollars.

Amount of Payment Payable Within 5 Months After Acceptance

Enter the amount of payment payable within 5 months after acceptance in U.S. dollars.

Periodic Payment

Mark the box if you will pay your offer in full in 6 to 24 months.

Enter the amount of your offer in U.S. dollars.

First Monthly Payment

Enter the amount of the first monthly payment in U.S. dollars.

Monthly Payment

Enter the amount of the monthly payment in U.S. dollars.

Day of Each Month

Enter which day of the month the payment will be received.

Number of Months

Enter the number of months the payment will be received.

Final Payment

Enter the amount of the final payment in U.S. dollars.

Day of Final Payment

Enter the day of the final payment.

Month of Final Payment

Enter the month of the final payment.

Section 5. Designation of Payment, Electronic Federal Tax Payment System (EFTPS), and Deposit

Designation of Payment

Enter your tax year or quarter if you want your payment to be applied to a specific tax year and a specific tax debt, such as a Trust Fund Recovery Penalty.

Electronic Federal Tax Payment System (EFTPS)

Enter the offer payments made through the EFTPS.

Offer Application Fee

Enter the amount of the offer application fee which is $205.00.

Date

Enter the date when the payment was made.

EFT Number

Enter the 15-digit Electronic Funds Transfer (EFT) number.

Offer Payment

Enter the amount of the offered payment in U.S. dollars.

Date

Enter the date when the payment was made.

EFT Number

Enter the 15-digit Electronic Funds Transfer (EFT) number.

Deposit

Mark the box below if you are paying more than the initial payment with your offer and you want part of that payment treated as a deposit:

• My payment of (amount) includes the $205.00 application fee and (first month’s payment amount) for my first month’s payment. I am requesting the additional amount of (deposit amount) be held as a deposit.

Mark one of the boxes below if your offer is rejected, returned, or withdrawn:

• Return it to you - Enter your initial.
• Apply it to your tax debt - Enter your initial.

Section 6. Source of Funds, Making Your Payment, Filing Requirements, and Tax Payment Requirements

Source of Funds

Enter where you will obtain the funds to pay your offer.

Filing Requirements

Mark the appropriate box which corresponds to your filing requirements. You may select:

• I have filed all required tax returns and have included a complete copy of any tax return filed within 12 weeks of this offer submission
• I was not required to file a tax return for the following years - Enter the tax years when you were not required to file a tax return.

Tax Payment Requirements

Mark all of the appropriate boxes which correspond to your tax payment requirements. You may select:

• I have made all required estimated tax payments for the current tax year
• I am not required to make any estimated tax payments for the current tax year
• I have not made all required federal tax deposits for the current quarter
• I am not required to make any federal tax deposits for the current quarter

Section 8. Signatures

Signature of Taxpayer/Corporation Name

Affix your signature.

Phone Number

Enter your phone number.

Today’s Date

Enter today’s date using the format: Month-Day-Year.

Signature of Spouse/Authorized Corporate Officer

Have your spouse or authorized corporate officer affix his or her signature.

Phone Number

Have your spouse or authorized corporate officer enter his or her phone number.

Today’s Date

Have your spouse or authorized corporate officer enter today’s date using the format: Month-Day-Year.

Section 9. Paid Preparer Use Only

Signature of Preparer

Have your preparer affix his or her signature.

Phone Number

Have your preparer enter his or her phone number.

Today’s Date

Have your preparer enter today’s date using the format: Month-Day-Year.

Authorization

Mark the box if you are authorizing the IRS to contact you at the telephone number listed above and leave detailed messages concerning this offer on your voicemail or answering machine.

Name of Paid Preparer

Have your preparer enter his or her full legal name.

Preparer’s Preparer Tax Identification Number (PTIN)

Have your preparer enter his or her preparer tax identification number (PTIN).

Firm’s Name

Have your preparer enter the name of the firm.

Firm’s Address

Have your preparer enter the address of the firm including the ZIP code.