IRS Offer In Compromise Tax Forms and Necessary Documentation

offer in compromise form 656When filing for an Offer in Compromise, the IRS requires you to file several documents in order to be considered for this type of tax settlement.

    • IRS Form 656 – Offer in Compromise Booklet and Form. Form 656 is the actual contract and form that the offer is made to the IRS in which the taxpayer makes to the IRS to compromise the taxes that they owe.
    • IRS Form 433-A – Collection Collection Information Statement for Wage Earners and Self-Employed Individuals. This is the form that should be used by individuals when filing for an offer in compromise. This form is used by the IRS to determine the likelihood of them eventually collecting the taxes owed from you. It is a 6-page document that will require you to give lots of personal information about employment, income, investments, banks, insurance, cash, credit cards and all financial information to make a solid determination about the taxpayers financial standing.
    • IRS Form 433-B – Collection Information Statement for Businesses. This form is to be used by business when filing for an offer in compromise. This form is used to determine the likelihood of the IRS eventually collecting on the taxes that are owed. If the taxpayer is trying to compromise both personal and business taxes owed, both Form 433-B and 433-A need to be submitted.

Other related documentation that is required other than IRS forms that is required is listed below. Typically, three months worth of each form of documentation is needed (and some of these documents are needed when filling out the IRS forms as well):

  • Pay stubs
  • Credit card statements
  • Mortgage payments
  • Bank statements
  • Car loan statements
  • Investment statements
  • Health care statements
  • Child care
  • Housing
  • Transportation
  • Other expenses
  • Copies of tax returns for the prior 5 years
  • Copies of the tax returns for the years that money is owed

The Offer in Compromise is a long and tedious filing with lots of documentation required. The IRS does not make it easy for individuals to receive this type of relief and they make sure it is only available to those individuals who really need it. It is best for taxpayers to work with a tax negotiation company when filing for an offer in compromise. A tax negotiation company can analyze an individual’s financial situation and determine how likely they are to receive this form of settlement.