IRS Offer In Compromise Settlement

IRS provides a package for filing an offer in compromise. The package includes the latest version of form 656, forms 433-A and 433-B. This package helps lessen the hassles of the complicated procedures of an application.

A worksheet for the calculation of offer amount is included in the package along with relevant information and instructions. Individual or self-employed taxpayers have to present a collection information statement in form 433-A.

You have to give a written narrative explaining your special state of affairs and why paying the tax in full would cause economic hardship for you and your family. It should quote the relevant public policies or equity considerations for the acceptance of the offer in compromise. Also, an income certification in form 656 has to be attached. All important financial documents required for the processing of the offer should accompany the application. It goes without saying that signature and date in the application are a must. An application fee of $150 has to be paid in the form of a check or money order. Some taxpayers are eligible for exemption of application fee.

Offer in compromise applications have to be checked cautiously before submitting. Any error can lead to delays or even the rejection of application. Expert advice on how to file an offer in compromise is provided by many lawyers. There are also software offering help. In case you seek the help of a tax professional, a filled in form 2848 has to be signed and given to the lawyer since a power of attorney is essential to represent the client before the IRS.

Offer in compromise form is available online. It can also be obtained from a local IRS office or ordered directly over the phone. The completed application has to be mailed to the concerned office. Residents of the western states should forward their application to Memphis and eastern states to Holtsville, NY.