Fill - Free fillable Form 656-L 2012 Offer in Compromise PDF form

Form 656-L

Offer in Compromise

(Doubt as to Liability)

CONTENTS

■ What you need to know ................................................................2

■ Important information ....................................................................2

■ Form 656-L ...................................................................................5

IRS contact information

If you have questions about qualifying for an offer in compromise, please call our toll-free

number at 1-800-829-1040.

Taxpayer resources

You may also seek assistance from a professional tax assistant at a Low Income Taxpayer Clinic, if

you qualify. These clinics provide help to qualiﬁed taxpayers at little or no charge. IRS Publication

4134, Low Income Taxpayer Clinic List, provides information on clinics in your area.

Publication 4134 and other IRS forms are available through the Internal Revenue Service website

at www.irs.gov, by phone at 1-800-TAX-FORM (1-800-829-3676), or at your local IRS ofﬁce.

Form 656-L (Rev. 2-2012) Catalog Number 47516R Department of the Treasury Internal Revenue Service www.irs.gov

INSTRUCTIONS FOR FORM 656−L, OFFER IN COMPROMISE (DOUBT AS TO LIABILITY)

What you need to know

What is an Offer in

Compromise?

An offer in compromise is an agreement between you (the taxpayer) and the

Internal Revenue Service (IRS) that settles a tax debt for less than the full

amount owed. The program provides eligible taxpayers with a path toward

paying off their tax debt and getting a “fresh start.” The ultimate goal is a

compromise that suits the best interest of both the taxpayer and the IRS.

If you have a legitimate doubt that you owe part or all of the tax debt, you

will need to complete a Form 656-L Offer in Compromise (Doubt as to

Liability). If you do not dispute the amount of the tax debt, you should not ﬁle

a Form 656-L.

Submitting an offer application does not guarantee that the IRS will accept

your offer. It begins a process of evaluation and veriﬁcation by the IRS.

What is a Doubt as to Liability

offer?

Doubt as to liability exists where there is a genuine dispute as to the exis-

tence or amount of the correct tax debt under the law.

Doubt as to liability does not exist if the tax debt has been established by a

ﬁnal court decision or judgment concerning the existence or amount of the

tax debt or if the tax debt is based on current law.

A doubt as to liability offer will only be accepted for the tax period(s) in

question.

Note: If you do not dispute the amount of the tax debt, you should not ﬁ le a

Form 656-L. Doing so may result in the offer being returned with no consid-

eration.

What documentation or

support is needed?

You must provide supporting documentation or evidence that will help the

IRS identify the reason(s) you doubt the accuracy of the tax debt.

You must include a written statement explaining why the tax debt or portion

of the tax debt is incorrect.

How much should I offer? The amount of your offer should be based on what you believe the correct

amount of the tax debt should be, not what you owe.

You must offer more than zero ($0). If you do not want to offer more than

zero you should read the section below (see page 4), What alternatives do

I have to sending in an Offer in Compromise (Doubt as to Liability)?

IMPORTANT INFORMATION

What is the difference

between a Doubt as to

Liability Offer and a Doubt as

to Collectibility Offer?

A doubt as to liability offer is an offer in compromise based on a legitimate

doubt that you owe any part of the tax debt. If you believe you do not owe

part or all of the tax debt, you will need to complete a Form 656-L, Offer

in Compromise (Doubt as to Liability). No deposit or application fee is

required for a doubt as to liability offer.

Examples of when you should

submit a Doubt as to Liability

Offer

A doubt as to collectibility offer is when you agree that you owe the taxes

but you cannot pay your tax debt in full. To be considered for a doubt as to

collectibility offer you must make an appropriate offer based on what the

IRS considers your true ability to pay. To request consideration under doubt

as to collectibility, you must complete a Form 656, Offer in Compromise,

found in Form 656-B, Offer in Compromise Booklet. Form 656 or 656-B is

not included as part of this package. You may get a Form 656-B by calling

the toll free number 1-800-829-1040, by visiting a local IRS ofﬁce, or at

www.irs.gov.

IMPORTANT NOTE

You cannot submit an offer based on doubt as to liability (Form 656-L) and

an offer based on doubt as to collectibility (Form 656 or 656-B) at the same

time, claiming both that you do not believe the tax debt is correct (doubt as

to liability) and that you are unable to pay it (doubt as to collectibility). It is

in your best interest to resolve any disagreements about the validity of the

tax debt before ﬁling an offer based on doubt as to collectibility. If you send

both kinds of offers at the same time, the doubt to collectibility offer will be

returned without further consideration.

Generally, you will send in a doubt as to liability offer when you were unable

to dispute the amount of tax the IRS claims you owe during the time allowed

by the Internal Revenue Code or IRS guidelines. Possible reasons for

submitting a doubt as to liability offer in compromise include the following:

the examiner made a mistake interpreting the tax law, the examiner failed

to consider the evidence presented; new evidence is available to support

a change to the assessment. Below are some examples of when it may be

appropriate to make an offer based on doubt as to liability.

Example 1: You ﬁled your tax return reporting stock options as valued

by your employer, which created a large tax liability including Alternative

Minimum Tax (AMT). You paid part of the tax debt, but could not pay the full

amount owed. You later discovered that the stocks were not worth as much

as you originally reported. This was due to fraudulent acts by the broker

and/or your employer. You ﬁled a claim for a refund based on the reduced

value of stock options. IRS told you that the full amount of the tax debt had

to be paid before they could consider your claim and denied your claim for

refund.

Example 2: You were audited by the IRS. When this happened, you moved

and did not get the notiﬁcation or you suffered a disaster (such as books

and records were destroyed in a ﬁre or other natural disaster) causing you

to miss the meeting with the auditor. The IRS disallowed all expenses and

now you have a tax debt. You discover the problem when you try to borrow

some money and ﬁnd that there is a federal tax lien ﬁled. You are able to

reconstruct your books and records with the correct expenses that would

signiﬁcantly lower your tax debt.

Example 3: You are an ofﬁcer of a corporation that has employees. You are

not in a decision-making position nor do you have the authority to pay bills

or sign checks. The business is struggling to make ends meet. In order to

pay suppliers, the money that should have been paid to the IRS as a federal

tax deposit was used to continue business operation. In an effort to collect

the trust fund part of the employee’s wages, the IRS assessed the trust fund

portion of the tax against you and all the other ofﬁcers of the corporation.

You were not a person responsible for collecting and paying the withheld

income and employment taxes. You have supporting statements and docu-

mentation to support that fact.

What alternatives do I have to

sending in an Offer in

Compromise (Doubt as to

Liability)?

When you disagree with the accuracy of a tax debt, depending

on the situation and the type of tax, the Service has other

available remedies. Generally, the options below should be

explored ﬁrst before submitting an offer in compromise.

Note: If you wish to obtain any of the publications mentioned

below or have any questions about completing the forms, you

may call toll free at (800) 829-1040, visit your local IRS ofﬁ ce, or

our website at www.irs.gov.

If you think your tax liability is

incorrect because:

Then:

of an audit, or IRS created a return for

you because you did not ﬁ le one

see Publication 3598, The Audit

Reconsideration Process

items were not reported correctly on

your tax return or because IRS made

an adjustment on your return

see the instructions for Form 1040X,

Amended U.S. Individual Income

Tax Return

items were not reported properly on a

tax return, other than Forms 1040 or

1120, or because IRS made an adjust-

ment on your return

see the instructions for Form 843,

Claim for Refund and Request for

Abatement

you had reasonable cause to remove

or reduce penalties IRS charged

see Notice 746, Information About

Your Notice, Penalty and Interest

you believe additional interest IRS

charged you was due to IRS errors or

delays

see the instructions for Form 843,

Claim For Refund and Request for

Abatement

you believe you were not a responsible

person of a corporation and have been

assessed the trust fund portion of em-

ployment taxes

see the instructions for Form 843,

Claim For Refund and Request for

Abatement

you believe you should be considered

an “innocent spouse” for a joint income

tax return

see Publication 971, Innocent

Spouse Relief

Where do I send my

application?

You should mail the completed package to:

Brookhaven Internal Revenue Service

COIC Unit

P.O. Box 9008

Holtsville, NY 11742-9008

Form 656-L

(February 2012)

Catalog Number 47516R

Department of the Treasury — Internal Revenue Service

OMB No. 1545-1686

Section 1

Your Contact Information

Your First Name, Middle Initial, Last Name

If a Joint Offer, Spouse’s First Name, Middle Initial, Last Name

Your Physical Home Address (Street, City, State, ZIP Code)

Mailing Address (if different from above or P.O. Box number)

Business Name

Business Address

(Street, City, State, ZIP Code)

IRS Received Date

Social Security Number (SSN)

(Your SSN)

(Spouse SSN)

Employer Identification Number

(EIN)

(EIN not included in offer)

Section 2 To: Commissioner of Internal Revenue Service

I/We submit this offer to compromise, based on doubt as to liability plus any interest, penalties, additions to tax, and additional amounts required by

law (tax debt) for the tax type and period(s) marked below:

[Please mark an “X” in the box for the correct description and fill-in the correct tax period(s)].

1040/1120 Income Tax [List all year(s); for example 1040 2009, 1120 2010, etc.]

941 Employer's Quarterly Federal Tax Return [List all quarterly period(s); for example 03/31/2009, 06/30/2010, 09/30/2010, etc.]

940 Employer’s Annual Federal Unemployment (FUTA) Tax Return [List all year(s); for example 2010, 2011, etc.]

Trust Fund Recovery Penalty as a responsible person of

(enter corporation name) ,

for failure to pay withholding and Federal Insurance Contributions Act taxes (Social Security taxes), for period(s) ending [List all quarterly period(s);

for example 03/31/2009, 06/30/2009, etc.]

Other Federal Tax(es) [specify type(s) and period(s)]

Note: If you need more space, use a separate sheet of paper and title it “Attachment to Form 656-L Dated .” Sign and date the

attachment following the listing of the tax periods.

Section 3 Amount of the Offer

I/we offer to pay $

Must be more than zero ($0) and payable within 90 days of the notification of acceptance, unless an alternative payment term is approved at the

time the offer is accepted.

Section 4 Terms

By submitting this offer, I/we have read, understand and agree to the following terms and conditions:

Terms, Conditions, and Legal

Agreement

In the following agreement, the pronoun “we” may be assumed in place of “I” when there are joint

liabilities and both parties are signing this Agreement.

I/we agree to the following conditions:

www.irs.gov

Form

656-L (Rev. 2-2012)

Offer in Compromise (Doubt as to Liability)

Page 2 of 4

Section 4 Terms (Continued)

I/we voluntarily submit all payments made on this offer.

The IRS will apply payments made under the terms of this offer in the best interest of the

government.

If the IRS rejects or returns the offer or I/we withdraw the offer, the IRS will return any amount

paid with the offer. If I/we agree in writing, the IRS will apply the amount paid with the offer to the

amount owed. If I/we agree to apply the payment, the date the IRS received the offer remittance

will be considered the date of payment. I/we understand the IRS will not pay interest on any

amount I/we send with the offer.

IRS will keep my/our payments

and fees

The IRS will keep all payments and credits made, received, or applied to the total original tax

debt before I/we send in the offer or while it is under consideration. The IRS may keep any

proceeds from a levy served prior to submission of the offer, but not received at the time the offer

is sent in.

If you currently have an approved installment agreement with IRS and are making installment

payments, then you may stop making those installment agreement payments when you have

been notified your offer has been assigned for consideration. If your offer is rejected or returned

for any reason, your installment agreement with IRS will be reinstated with no additional fee.

If the Doubt as to Liability offer determines that you do not owe the taxes, or the IRS ultimately

over-collected the compromised tax liability, the IRS will refund the over-collected amount to you,

unless such refund is legally prohibited by statute.

I/we agree to waive time limits

provided by law

To have my offer considered, I/we agree to the extension of time limit provided by law to assess

my tax debt (statutory period of assessment). I/we agree that the date by which the IRS must

assess my/our tax debt will now be the date by which my/our debt must currently be assessed

plus the period of time my/our offer is pending plus one additional year if the IRS rejects, returns,

or terminates my/our offer or I/we withdraw it. [Paragraph (i) of this section defines pending and

withdrawal]. I/we understand I/we have the right not to waive the statutory period of assessment

or to limit the waiver to a certain length or certain periods or issues. I/we understand, however,

the IRS may not consider my/our offer if I/we decline to waive the statutory period of assessment

or if I/we provide only a limited waiver. I/we also understand the statutory period for collecting

my/our tax debt will be suspended during the time my/our offer is pending with the IRS, for 30

days after any rejection of my/our offer by the IRS, and during the time any rejection of my/our

offer is being considered by the Appeals Office.

I/we understand I/we remain

responsible for the full amount

of the tax liability

The IRS cannot collect more than the full amount of the tax debt under this offer.

I/we understand I/we remain responsible for the full amount of the tax debt, unless and until the

IRS accepts the offer in writing and I/we have met all the terms and conditions of the offer. The

IRS will not remove the original amount of the tax debt from its records until I/we have met all the

terms of the offer.

I understand the tax I/we offer to compromise is and will remain a tax debt until I/we meet all the

terms and conditions of this offer. If I/we file bankruptcy before the terms and conditions of this

offer are completed, any claim the IRS files in bankruptcy proceedings will be a tax claim.

Once the IRS accepts the offer in writing, I/we have no right to contest, in court or otherwise, the

amount of the tax debt.

Pending status of an offer and

right to appeal

The offer is pending starting with the date an authorized IRS official signs this form. The offer

remains pending until an authorized IRS official accepts, rejects, returns, or acknowledges

withdrawal of the offer in writing. If I/we appeal an IRS rejection decision on the offer, the IRS will

continue to treat the offer as pending until the Appeals Office accepts or rejects the offer in

writing. If I/we do not file a protest within 30 days of the date the IRS notifies me of the right to

protest the decision, I/we waive the right to a hearing before the Appeals Office about the offer in

compromise.

I/we understand if IRS fails to

make a decision in 24-months

my/our offer will be accepted

I/we understand under Internal Revenue Code (IRC) § 7122(f), my/our offer will be accepted, by

law, unless IRS notifies me/us otherwise, in writing, within 24 months of the date my offer was

initially received.

I/we understand what will

happen if I/we fail to meet the

terms of my/our offer (e.g.

default)

If I/we fail to meet any of the terms and conditions of the offer and the offer defaults, then the IRS

may do the following:

•

immediately file suit to collect the entire unpaid balance of the offer;

•

immediately file suit to collect an amount equal to the original amount of the tax debt as

liquidating damages, minus any payment already received under the terms of this offer;

•

disregard the amount of the offer and apply all amounts already paid under the offer

against the original amount of the tax debt;

•

file suit or levy to collect the original amount of the tax debt, without further notice of

any kind.

Catalog Number 47516R

www.irs.gov

Form

656-L (Rev. 2-2012)

( )

) (

Page 3 of 4

Section 4 Terms (Continued)

The IRS will continue to add interest as provided in IRC Section § 6601 on the amount the IRS

determines is due after default. The IRS will add interest from the date the offer is defaulted until

I/we completely satisfy the amount owed.

I/we understand the IRS may file a

Notice of Federal Tax

Lien on my/our property

l) The IRS may file a Notice of Federal Tax Lien to protect the Government’s interest during the

offer investigation. If the offer is accepted, the tax lien will be released when the terms of the

offer agreement are satisfied.

I/we authorize the IRS to

contact relevant third parties

in order to process my/our

offer

m) I/we understand that IRS employees may contact third parties in order to respond to this

request, and I/we authorize the IRS to make such contacts. Further, in connection with this

request, by authorizing the IRS to contact third parties, I/we understand that I/we will not receive

notice of third parties contacted as is otherwise required by IRC § 7602(c).

Section 5 Explanation of Circumstances

THIS SECTION MUST BE COMPLETED.

Explain why you believe the tax is incorrect. Note: You may attach additional sheets if necessary. Please include your name and SSN and/or EIN on

all additional sheets or supporting documentation.

Section 6 Mandatory Signature(s)

Taxpayer Attestation: If I/we submit this offer on a substitute form, I/we affirm this form is a verbatim duplicate of the official Form 656-L, and

I/we agree to be bound by all the terms and conditions set forth in the official Form 656-L. Under penalties of perjury, I/we declare that I/we

have examined this offer, including accompanying schedules and statements, and to the best of my/our knowledge and belief, it is true,

correct and complete.

Signature of Taxpayer Daytime Telephone Number Date (mm/dd/yyyy)

Signature of Taxpayer Date (mm/dd/yyyy)

Section 7

Application Prepared by Someone Other than the Taxpayer

If this application was prepared by someone other than you (the taxpayer), please fill in that person’s name and address below.

Name

Address

(if known) (Street, City, State, ZIP code)

Daytime Telephone Number

Section 8

Paid Preparer Use Only

Signature of Preparer

Name of Preparer Date (mm/dd/yyyy) Preparer's CAF no. or PTIN

Firm's Name, Address, and ZIP Code

Daytime Telephone Number

Include a valid, signed Form 2848 or 8821 with this application or a copy of a previously filed form.

Catalog Number 47516R

www.irs.gov

Form

656-L (Rev. 2-2012)

( )

Page 4 of 4

Section 9

Third Party Designee

Do you want to allow another person to discuss this offer with the IRS?

Yes. Complete the information below. No

Designee’s Name Telephone Number

Include a valid, signed Form 2848 or 8821 with this application or a copy of a previously filed form.

IRS Use Only

I accept the waiver of the statutory period of limitations on assessment for the Internal Revenue Service, as described in Section 5 (d).

Signature of Authorized IRS Official Title Date (mm/dd/yyyy)

Privacy Act Statement

We ask for the information on this form to carry out the internal revenue laws of the United States. Our authority to request this information is contained

in Section 7801 of the Internal Revenue Code.

Our purpose for requesting the information is to determine if it is in the best interests of the IRS to accept an offer. You are not required to make an

offer; however, if you choose to do so, you must provide all of the information requested. Failure to provide all of the information may prevent us from

processing your request.

If you are a paid preparer and you prepared the Form 656-L for the taxpayer submitting an offer, we request that you complete and sign Section 8 on

the Form 656-L, and provide identifying information. Providing this information is voluntary. This information will be used to administer and enforce the

internal revenue laws of the United States and may be used to regulate practice before the Internal Revenue Service for those persons subject to

Treasury Department Circular No. 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled

Actuaries, and Appraisers before the Internal Revenue Service. Information on this form may be disclosed to the Department of Justice for civil and

criminal litigation.

We may also disclose this information to cities, states and the District of Columbia for use in administering their tax laws and to combat terrorism.

Providing false or fraudulent information on this form may subject you to criminal prosecution and penalties.

Application Checklist

Did you complete all fields and sign the Form 656-L?

Did you make an offer amount that is greater than zero ($0)?

If you want to allow the IRS to discuss your offer with another person did you complete the “Third-Party Designee”

section on the Form 656-L?

If someone other than you completed the Form 656-L, did that person sign it?

Did you sign and include the Form 656-L?

If you want a third party to represent you during the offer process, did you include a Form 2848 or Form 8821

unless one is already on file?

Did you include supporting documentation and an explanation as to why you doubt you owe the tax?

Note: There is no application fee or deposit required for a Doubt as to Liability offer.

Mail your package to:

Brookhaven Internal Revenue Service

COIC Unit

P.O. Box 9008

Holtsville, NY 11742-9008

Catalog Number 47516R

www.irs.gov

Form

656-L (Rev. 2-2012)

Download
Save PDF to desktop

Email
Email completed PDF

Send for Signing
Email for others to sign

Print
Print document

NAME

Form 656-L 2012 Offer in Compromise

View Audit Log
Print With Audit Log
Duplicate Document

Fill Online, Printable, Fillable, Blank Form 656-L 2012 Offer in Compromise Form

Use our library of forms to quickly fill and sign your IRS forms online.

Related forms

Fillable Form 656-L 2012 Offer in Compromise

Fill Online, Printable, Fillable, Blank Form 656-L 2012 Offer in Compromise Form

Use our library of forms to quickly fill and sign your IRS forms online.

Related forms

First 20 documents completely FREE!