How to File the Offer in Compromise

There is a great deal of misinformation about the Offer in Compromise. Form 656-B, the Offer in Compromise booklet available from the IRS in PDF format is the only accurate source. This document, available in PDF format from the IRS website, includes material about preparing an offer in compromise, completing the worksheets, and details about the forms needed to properly file an offer in compromise.

Taxpayers that opt to submit an offer in compromise (OIC) without the guidance of a tax professional should take steps to ensure that they are using the most up-to-date version of Form 656 or Form 656-L.

Choosing the right form is dependent upon the reason for the offer in compromise, which should be determined prior to contacting the IRS. If there is doubt that the liability could be collected in full, either in a lump sum or through an installment agreement, Form 656 should be filed. For cases where it is believed that the tax liability is inaccurate, taxpayers should file Form 656-L.

Taxpayers must choose one reason and should not file both forms. If they are unable to pay but believe that the tax liability is incorrect, then form 656-L should be used.

Additionally, Form 433-A, the Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B, Collection Information Statement for Businesses should be submitted unless the Offer in Compromise is based on the doubt as to liability.

1. Review all your options before submitting an offer in compromise.
2. Make use of the "Is Your Offer in Compromise Processable?" checklist, which is found in the Offer in Compromise Booklet, Form 656-B.
3. Prepare a detailed cover letter explaining the case as it is presented in the IRS Forms.
4. Attach all required documentation, even if the IRS has copies in its files.
5. Complete every item on Form 656.
6. Include a check or money order covering all fees and payments.
7. Get and stay current on estimated taxes and federal tax deposits.
8. Document all requests for more information.
9. Keep a log with notes on all phone calls.
10. Respond to all requests quickly.
11. Keep copies of all documents sent.
12. Complete every item on Form 433-A or Form 433-B.

Where to File Form 656

Residents of: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Mississippi, Montana, Nevada, New Mexico, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin or Wyoming:

If you are a wage earner, retiree, or a self-employed individual without employees; then mail Form 656 and all attachments to:

Memphis Internal Revenue Service
Center COIC Unit
PO Box 30803 AMC
Memphis, TN 38130-0804

If you are someone other than a wage earner, retiree, or self-employed individual without employees; then mail Form 656 and all attachments to:

Memphis Internal Revenue Service
Center COIC Unit
PO Box 30804, AMC
Memphis, TN 38130-0804

Residents of: Arkansas, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, West Virginia, or have a foreign address:

If you are a wage earner, retiree, or a self-employed individual without employees; then mail Form 656 and all attachments to:

Brookhaven Internal Revenue Service
Center COIC Unit
PO Box 9007
Holtsville, NY 11742-9007

If you are someone other than a wage earner, retiree, or a self-employed individual without employees; then mail form 656 and all attachments to:

Brookhaven Internal Revenue Service
Center COIC Unit
PO Box 9008
Holtsville, NY 11742-9008

Where to File Form 656-L (Doubt as to Liability)

Brookhaven Internal Revenue Service
COIC Unit
PO Box 9008
Holtsville, NY 11742-9008

In addition to accessing the Form 656 and Form 656-L online, you may obtain it by calling the IRS toll free number  1-800-829-3676 or by visiting your local IRS office.

This information was obtained from the IRS website and is current as of the date of its publication. To obtain the most current data, contact the IRS or visit hwww.IRS.gov and search for the Offer in Compromise.