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Form 656B: Form 656 Booklet Offer in Compromise
IRS Form 656 Booklet Offer in Compromise is used to submit an offer of compromise for tax debt, and the application fee is $205 unless Low-Income Certification Guidelines are met.
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IRS Form 656B - Form 656 Booklet Offer in Compromise
IRS Form 656 Booklet Offer in Compromise is used to submit an offer of compromise for tax debt, and the application fee is $205 unless Low-Income Certification Guidelines are met.
Risk Radar
Scan points- 1Do not send any money with your application if you qualify for Low-Income Certification Guidelines.
- 2Filing without submitting Form 656 along with the completed Forms 433-A/B (OIC).
- 3Submitting an offer package without making the required initial payment (unless low-income certified).
- 4Not including all tax returns that the filer is legally required to file.
- 5Failing to pay the $205 application fee if Low-Income Certification Guidelines are not met.
Plain English
This form allows a taxpayer to propose a reduced payment amount to settle a tax debt with the IRS. By submitting Form 656, the filer attempts to negotiate an agreement where they pay less than the full amount owed while still resolving the obligation. Penalties and interest continue to accrue until the IRS considers the offer.
Submission Date
- Filing date: 2026-04-18 11:10:37
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when submitting an offer to compromise tax debt to the IRS.
- Do not use Form 656 when your business is ineligible for consideration because the trust fund portion of the tax is unpaid or the Trust Fund Recovery Penalty determination has not been made on all potentially responsible parties (unless you are a victim of payroll service provider fraud or failure).
- Check Form 433-A (OIC) instead when you are an individual taxpayer who needs to submit collection information for wage earners and self-employed individuals.
Form selector
Use this form or another form?
Business Taxpayer
Use this form when submitting the offer as a business, but ensure Form 433-B (OIC) is completed.
✓ Check that your offer amount meets or exceeds the calculation from Form 433-B(OIC).
Individual Taxpayer
Use this form when submitting the offer as an individual, but ensure Form 433-A (OIC) is completed.
✓ Check that your offer amount meets or exceeds the calculation from Form 433-A(OIC).
Victim of Fraud/Failure
Use this form when submitting the offer and you are a victim of payroll service provider fraud or failure, as the Trust Fund Recovery Penalty assessment is not required prior to submission.
✓ Check that your supporting documentation clearly identifies the fraud or failure.
Installment Agreement Holder
If you have an approved installment agreement, use this form because payments are paused while the offer is considered.
✓ Check that you include a copy of any tax return filed within 10 weeks of submitting this offer.
Deadline or filing window
The offer is considered only after meeting prerequisites such as filing all required tax returns and making estimated payments. If the IRS rejects the offer, it continues to accrue penalties and interest while under review; there is no stated extension period.
Checklist
What you need before filling it out
Application Fee
$205 application fee · Form 656, p.5 & p.6
Business Eligibility Check
Trust fund portion paid OR IRS determination made on all responsible parties · Form 656, p.4
Required Attachments
Copies of required documentation (per form) · Form 433-A (OIC) and 433-B (OIC)
Offer Amount Calculation
Must be equal to or greater than the amount calculated in Form 433-A(OIC) or 433-B(OIC) · Form 656, p.7
Initial Payment/Fee Submission
$205 application fee AND initial offer payment · Form 656, p.6 & p.7
Payment Method
Electronic Federal Tax Payment System (EFTPS) or Individual Online Account · Form 656, p.7
Before you submit
- 1Ensure Form 656 is completed and signed.
- 2Include the completed and signed Form 433-A (OIC) if you are an individual taxpayer.
- 3Include the completed and signed Form 433-B (OIC) if you are a business.
- 4Confirm the $205 application fee is included (unless meeting Low-Income Certification Guidelines).
- 5Verify that your offer amount on Form 656 meets or exceeds the calculation from Form 433-A(OIC) or 433-B(OIC).
- 6Attach copies of all required supporting documentation for Forms 433-A (OIC) and 433-B (OIC).
- 7Provide a separate payment method for the application fee AND the initial offer payment.
- 8If you have filed returns, confirm you include a copy of any return filed within 10 weeks of submission to prevent return.
How to file this form
- 1Fill out Form 656, identifying tax years, type of tax, your offer amount, and payment terms.
- 2Complete and sign Form 433-A (OIC) or Form 433-B (OIC), based on whether you are an individual or a business.
- 3Attach all required supporting documentation to Forms 433-A (OIC) and 433-B (OIC); send copies, not originals.
- 4Pay the $205 application fee and your initial offer payment using EFTPS, Individual Online Account, personal check, cashier’s check, or money order (providing separate payments for each).
- 5Submit the entire package to the IRS; if you have filed returns, include a copy of any return filed within 10 weeks of this submission.
Known limitations
- 1A business cannot be eligible for an offer unless the trust fund portion of the tax is paid or the IRS has issued a Trust Fund Recovery Penalty determination(s) on all potentially responsible parties, though this requirement is waived if the offer is submitted as a victim of payroll service provider fraud or failure.
- 2If the IRS returns the Form 656, the taxpayer does not have the right to appeal; however, they do have the right to appeal if the IRS rejects the offer.
- 3When submitting an offer, taxpayers must resolve any doubt owed part or all of the tax debt before basing the offer on their ability to pay (especially when submitting offers under Doubt as to Collectibility or Effective Tax Administration).
- 4If a taxpayer meets the Low-Income Certification guidelines for Form 656 Booklet Offer in Compromise, no money should be sent with the application.
- 5When calculating business assets, equity in assets used to produce income (like a tow truck) may be allowed to be excluded by the IRS.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is dated 04/26, and the source material does not specify a separate 'latest information' page; it provides comprehensive content across pages 1 through 7.
What changed or needs a fresh check
- Edition date — confirm the revision date reads 04/26.
- Application Fee — confirm the required application fee is $205 (unless Low-Income Certification Guidelines apply).
- Mailing address — not stated in the official source excerpts, verify on the agency site.
- Signature — the form requires signing and acknowledgement by the IRS for the offer to be pending.
- Required Forms — confirm that Form 433-A (OIC) and/or Form 433-B (OIC) are completed and signed.
Quick Facts
Downloads
After you file
- 1Keep a copy of the completed Form 656 and all supporting documentation for personal records.
- 2Continue to timely file and pay all required tax returns, estimated tax payments, and federal tax payments for oneself and any business in which an interest exists after submitting the offer.
- 3If mailing the application package, make a copy of the entire application before sending it.
- 4The IRS may file a Notice of Federal Tax Lien (NFTL) at any time; taxpayers may appeal under the Collection Appeals Program (CAP) or request a Collection Due Process hearing before this occurs.
Sources
- SRCForm 656 identifies the tax years and type of tax you would like to compromise, as well as your offer amount and payment terms (Instructions p.7).
- SRCWhen applying for Form 656 Booklet Offer in Compromise, individuals may apply online using the Individual Online Account (Page 4) or mail the package to the Centralized Offer in Compromise Unit (Memphis or Brookhaven IRS Center) (Instructions p.7).
- SRCIf submitting an offer under Doubt as to Liability or Collectibility/Effective Tax Administration, taxpayers must resolve any doubt before submission (Instructions p.4).
- SRCBusiness eligibility requires that the trust fund portion of tax is paid unless applying as a victim of payroll service provider fraud/failure (Instructions p.4).
- SRCWhen completing Form 656, total available funds must be entered for each line item, rounded to the nearest dollar, with no negative numbers allowed (Instructions p.10).
- SRCFor personal assets on Form 656, the final calculation includes adding lines (7a) through (7c) and subtracting an IRS deduction of $11,980 for line (7) (Form p.12).
- SRCA reminder states that if Low-Income Certification guidelines are met, taxpayers should not send any money with their application package (Instructions p.7).
- SRCThe Catalog Number associated with Form 656 is 55896Q (Form p.12).
Common confusion points
Should I send money with my application?
Only if you do not meet the Low-Income Certification guidelines. If certified, DO NOT send any money.
→ Check the instructions on Form 656.
Do I need to pay the Trust Fund Recovery Penalty before filing?
Yes, unless you are submitting the offer as a victim of payroll service provider fraud or failure.
→ Review Section 3 and related facts on Form 656.
What happens if the IRS rejects my offer?
You have the right to appeal the rejection.
→ This is different from an offer that the IRS simply returns, where you do not have the right to appeal.
How should I report business assets like cryptocurrency or machinery?
List them in Section 5 of Form 656, rounding each item to the nearest whole dollar and entering '0' if a line item is negative.
→ Check instructions on Page 12 regarding asset listing.
What do I do with the IRS deduction when calculating total valuable items?
Add lines (7a) through (7c), then subtract the IRS deduction of $11,980 to find the final amount for line (7).
→ Ensure you are not including amounts from the lines with a letter beside the number.
Where do I mail my package if I am not applying online?
Mail it to the Centralized Offer in Compromise Unit at either the Memphis or Brookhaven IRS Center, depending on your state of residence.
→ Refer to Page 29, Application Checklist, for the specific address.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- You may appeal under the Collection Appeals Program (CAP) before a NFTL is filed.
Questions about IRS Form 656B
What is IRS Form 656B used for?
This form allows a taxpayer to propose a reduced payment amount to settle a tax debt with the IRS. By submitting Form 656, the filer attempts to negotiate an agreement where they pay less than the full amount owed while still resolving the obligation. Penalties and interest continue to accrue until the IRS considers the offer.
Who must file IRS Form 656B?
Individual taxpayers or businesses in which individuals have an interest must file Form 656 Booklet Offer in Compromise.
What information does IRS Form 656B require?
The form collects detailed financial information, including personal asset details (like those listed on Form 433-A), business assets (listed on Form 433-B), and required payment amounts. Specific sections capture data on valuable items, furniture, and self-employment income.
When is IRS Form 656B due?
The source does not state a specific due date; rather, the offer is considered while taxes are being filed and paid. Penalties continue to accrue while the IRS considers the offer.
Where do I file IRS Form 656B?
Individual taxpayers may apply online using the Individual Online Account or mail the package to the Centralized Offer in Compromise Unit at either the Memphis or Brookhaven IRS Center, depending on the state of residence.
How do I complete IRS Form 656B?
The application must include the completed and signed Form 656, along with supporting Forms 433-A (OIC) and 433-B (OIC) if applicable. The filer must also submit an initial offer payment unless they meet Low-Income Certification Guidelines. Finally, the entire package must be sent to the IRS.
What happens if IRS Form 656B is filed incorrectly?
If the IRS returns the Form 656, the filer has the right to appeal; however, if the initial offer is rejected, penalties and interest will continue to accrue while it is considered by the agency.
Should I send money with my application?
Only if you do not meet the Low-Income Certification guidelines. If certified, DO NOT send any money. Check the instructions on Form 656.
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