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What Do You Need to File an Offer in Compromise?

What Do You Need to File an Offer in Compromise?

The IRS Offer in Compromise (OIC) forms require a lot of work to complete. Before you embark on this long application process, consult with a tax attorney to discuss whether your offer has a reasonable chance of being accepted.

You’ll need to submit the following items as part of your OIC application:

  • Application Fee
  • Initial payment
  • Form 433-A or 433-B
  • Any supporting documentation
  • Form 656, Offer in Compromise

The forms you need are available from the IRS as part of the Offer in Compromise booklet.

Application Fee

The application is $186. If you meet the Low-Income Certification standards, you aren’t required to submit an application fee with your offer.

You must include separate checks for the application fee and the initial payment.

Initial Payment

You must send an initial payment with your OIC application. This payment will not be refunded to you if your offer is rejected.

If you are submitting a lump-sum offer, your initial payment must be at least 20% of your total offer amount. For periodic payment offers, your initial payment should be equal to the first month’s payment amount.

You have the option to pay more than the required initial payment amount and designate this amount as a deposit. These amounts can be refunded to you if your offer is denied, but you must mark these amounts as a deposit on your application.

Initial payments aren’t required for low-income certified taxpayers.

Form 433-A or 433-B

The OIC Collection Information Statement requires detailed information about every aspect of your finances. You’ll need to provide account balances, asset values, income, loans, and expense information.

All of this information will be used to calculate your reasonable collection potential and minimum offer amount. Your offer must be at least as much as the minimum offer amount.

Supporting Documents

The IRS will expect the following supporting documents with your Collection Information Statement:

  • Recent pay stubs from each employer
  • Recent account statements for bank accounts, retirement accounts, and other sources of income
  • Statements from mortgage and other lenders
  • Documents to show special circumstances that impede your ability to meet the minimum offer

Form 656

Form 656 states the exact terms of your offer, including how much you’ll pay and when you’ll pay it. This form also details everything the taxpayer is signing up for by submitting an OIC.

OICs come with a lot of strings attached. If you break the rules, even after you’ve paid the full offer amount, the IRS could rewind your OIC and reinstate the full amount of your balance. This can happen if you fail to file tax returns or pay estimated taxes within five years of the date the OIC is accepted.

Get help completing your Offer in Compromise by contacting a tax resolution attorney.

Contact The Gartzman Law Firm to speak with an Atlanta Offer in Compromise attorney about your case. Request your consultation by calling (770) 939-7710.