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Form 656 Offer in Compromise
IRS form allowing taxpayers to settle their tax debt for less than the full amount owed when they cannot pay in full or when doing so would create financial hardship.
PDF TemplateUse the instructions below to complete this form
Instructions
Complete Form 656 and submit with Form 433-A (individuals) or 433-B (businesses) to disclose your financial situation. The IRS evaluates your offer based on your reasonable collection potential: income, expenses, assets, and future earning potential. Include the $205 application fee and an initial payment (20% for lump sum offers). The IRS will generally not accept an offer if it believes the full amount can be collected. Use the IRS Offer in Compromise Pre-Qualifier tool to assess eligibility.