5 Things To Know About Form Tc-656

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The world of tax forms can be overwhelming, especially for those who are new to the process. One such form that often raises questions is the Form TC-656, also known as the "Offer in Compromise" form. If you're struggling with tax debt or wondering what this form is all about, you're in the right place. Here's what you need to know about Form TC-656:

What is Form TC-656?

Form TC-656 is an application used by the Internal Revenue Service (IRS) to facilitate an Offer in Compromise (OIC) for taxpayers who are unable to pay their tax debt in full. The OIC program allows taxpayers to settle their tax liability for less than the full amount owed.

Who is Eligible for Form TC-656?

To be eligible for Form TC-656, taxpayers must meet certain criteria, including:

• Filing all required tax returns
• Making all required estimated tax payments
• Not being in bankruptcy proceedings
• Not having any open audits or pending collection actions

Additionally, taxpayers must demonstrate that paying the full amount of tax debt would cause them economic hardship or that the amount offered is the most the IRS can expect to collect within a reasonable period.

Benefits of Using Form TC-656

There are several benefits to using Form TC-656:

• Reduced tax liability: By submitting an OIC, taxpayers may be able to settle their tax debt for less than the full amount owed.
• Avoid collection actions: The IRS may place a hold on collection actions while the OIC is being processed, which can help prevent wage garnishment, levies, and other collection activities.
• Fresh start: If the OIC is accepted, taxpayers can start fresh and move forward without the burden of tax debt.

What to Expect During the OIC Process

The OIC process typically involves the following steps:

• Submission: Taxpayers submit Form TC-656 along with supporting documentation and a non-refundable application fee.
• Review: The IRS reviews the application to determine whether the taxpayer meets the eligibility criteria and whether the offered amount is acceptable.
• Determination: The IRS makes a determination on the OIC, which may include acceptance, rejection, or a request for additional information.
• Appeal: Taxpayers have the right to appeal the IRS's determination if they disagree with the outcome.

Common Mistakes to Avoid When Using Form TC-656

When using Form TC-656, taxpayers should avoid the following common mistakes:

• Inaccurate or incomplete information: Failing to provide accurate and complete information can lead to delays or rejection of the OIC.
• Insufficient supporting documentation: Failing to provide sufficient supporting documentation can make it difficult for the IRS to verify the taxpayer's eligibility and offered amount.
• Missing deadlines: Missing deadlines can result in the OIC being rejected or delayed.

Additional Tips for Success

To increase the chances of a successful OIC, taxpayers should:

• Seek professional help: Consider hiring a tax professional or attorney to help with the OIC process.
• Keep accurate records: Keep accurate records of all correspondence and communication with the IRS.
• Be patient: The OIC process can take several months to complete, so be patient and plan accordingly.

By understanding the ins and outs of Form TC-656, taxpayers can make informed decisions about their tax debt and potentially find a more manageable solution. Remember to carefully review the eligibility criteria, benefits, and common mistakes to avoid to ensure a smooth and successful OIC process.