The Internal Revenue Service has released a new version of Form 656-B, “Offer in Compromise Booklet,” and a revised Form 656, “Offer in Compromise.”

The new Form 656-B contains all of the forms and instructions necessary to file an offer in compromise. The revised Form 656 has been slimmed down to four pages and now only includes the four-page offer-in-compromise application. All of the worksheets, checklists and instructions previously found in Form 656 can now be found in Form 656-B. The availability of the two forms allows taxpayers and practitioners to access the offer-in-compromise application without printing or sorting through the offer booklet.

An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability. Under certain circumstances, the IRS has the authority to settle federal tax liabilities by accepting less than full payment.

The new Form 656-B contains all the forms and instructions necessary to file an offer in compromise, including:

·    A checklist to determine if the offer can be processed;

·    A revised worksheet to calculate an offer amount — the IRS has revised the worksheet to be used with the new Form 433-A (revision January 2008);

·    Form 433-A, “Collection Information Statement for Wage Earners and Self-Employed Individuals” (revision January 2008), and Form 433-B, “Collection Information Statement for Businesses” (revision January 2008);

·    A revised IRS Offer-in-Compromise Low-Income Guidelines table based on the 2009 U.S. Department of Health and Human Services standards;

·    A revised Form 656-A, “Income Certification for Offer-in-Compromise Application Fee and Payment;” and,

·    The Offer-in-Compromise Summary Checklist to ensure all necessary information has been reviewed and the appropriate forms have been completed.

PDF versions of Form 656 and Form 656-B are available on in the Forms and Publications section, at IRS Taxpayer Assistance Centers, and by calling the IRS toll-free at (800) TAX-FORM.

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