IRS Form 656: Offer in Compromise
Form 656 is the application for an offer in compromise, a request to settle a tax debt for less than the full amount owed. The IRS looks at your income, expenses, assets and ability to pay. It comes with a booklet and financial forms, and the IRS page explains the fees and requirements.
What this form is for
It proposes a settlement amount and payment terms. It is filed with financial statements such as Form 433-A (OIC).
When people usually use it
People look into it when a balance seems impossible to pay over time. The IRS offers a pre-qualifier tool on its site to check before applying.
What to have ready
- Every notice showing your balance
- Full financial records
- The current Form 656 booklet from the IRS page
Notices that mention it
- IRS Notice CP504: Notice of intent to levy
- IRS Letter LT11: Final notice of intent to levy
- IRS Notice CP90: Intent to levy and right to a hearing
- IRS Notice CP14: Balance due
Related forms
- Form 433-A: Collection Information Statement for Wage Earners and Self-Employed Individuals
- Form 433-F: Collection Information Statement
- Form 9465: Installment Agreement Request
Read the IRS page
IRS.gov page for Form 656 (opens in a new tab). The IRS page is the final word on this form.
Frequently asked questions
What is IRS Form 656?
Form 656 is the application for an offer in compromise, a request to settle a tax debt for less than the full amount owed. The IRS looks at your income, expenses, assets and ability to pay. It comes with a booklet and financial forms, and the IRS page explains the fees and requirements.
Where do I get Form 656?
Get it from IRS.gov. The IRS page for Form 656, https://www.irs.gov/forms-pubs/about-form-656, has the latest revision, the instructions and any recent changes.
Do I need to file Form 656?
That depends on your own facts. The instructions on IRS.gov explain who uses Form 656, and any IRS letter you got may say what it needs from you. This is not tax advice.
What should I have ready for Form 656?
Gather: every notice showing your balance; full financial records; the current form 656 booklet from the irs page. The instructions on IRS.gov list everything the form asks for.
If you have an IRS letter
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OweRight is not the IRS and does not give tax or legal advice.