Revised Offer in Compromise Application Form
IR-2007-50, March 5, 2007
WASHINGTON — The Internal Revenue Service announced today that the newly revised
taxpayer application for an offer in compromise, the Form 656 package, is now available.
An offer in compromise is an agreement between a taxpayer and the IRS that resolves
the taxpayer's tax liability. Under certain circumstances, the IRS has the authority
to settle federal tax liabilities by accepting less than full payment.
"We hope that these changes help more people who qualify satisfy their tax obligations,”
said IRS Commissioner Mark W. Everson.
The Form 656 package was last revised in 2004 to help taxpayers correctly and completely
prepare an offer and reduce the chances of the offer being returned for omissions.
The new form retains the taxpayer burden reduction features while adding significant
changes as a result of the Tax Increase Prevention and Reconciliation Act of 2005
(TIPRA). These changes include:
- New payment terms and submission rules;
- A new matrix to assist in determining the number of Forms 656, $150 application
fee(s), and TIPRA payments to submit to the IRS depending on the number of individuals
submitting the offer, and the types of liabilities being compromised;
- A checklist, redesigned as a result of TIPRA, to help taxpayers determine if they
are eligible to file an OIC before they invest time in form preparation;
- Revised Section V defining the contractual terms of the offer;
- OIC Application Fee and Payment Worksheet to determine eligibility for claiming
exception to the payment of the $150 application fee and the mandatory offer payments
imposed by the TIPRA legislation;
- Form 656–PPV Periodic Payment Voucher, a removable form designed to be used to remit
the required TIPRA payments to the IRS while the offer is under investigation; and
- Form 656-A, renamed Income Certification for Offer in Compromise Application Fee
Applicants may order the package by calling the IRS toll-free at 1-800-TAX-FORM
(1-800-829-3676). The Form 656 package is now available on the IRS.gov Web site
in the Forms and Publications section and will be available at IRS walk-in offices