Form 656-B - Offer In Compromise Booklet Page 6
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32If You and Your Spouse Owe
If you and your spouse have joint tax debt(s) and you and/or your spouse are also
Joint and Separate Tax Debts
responsible for separate tax debt(s), you will each need to send in a separate
Form 656. You will complete one Form 656 for yourself listing all your joint and any
separate tax debts and your spouse will complete one Form 656 listing all his or
her joint tax debt(s) plus any separate tax debt(s), for a total of two Forms 656.
If you and your spouse or ex-spouse have a joint tax debt and your spouse or ex-
spouse does not want to be part of the offer, you on your own may submit a Form
656 to compromise your responsibility for the joint tax debt.
Each Form 656 will require the $186 application fee and initial payment unless you
are an individual, are operating as a sole proprietor, or are a disregarded single
member LLC taxed as a sole proprietor, and meet the Low Income Certification
guidelines.
If You Owe Individual and
If you have individual and business tax debt that you wish to compromise, you will
Business Tax Debt
need to send in two Forms 656. Complete one Form 656 for your individual tax
debts and one Form 656 for your business tax debts. Each Form 656 will require
the $186 application fee and initial payment.
Note: A business is defined as a corporation, partnership, or any business
that is operated as other than a sole-proprietorship. An individual's share of
a partnership debt will not be compromised. The partnership must submit an
offer based on the partnership's and partners' ability to pay.
If You Have Tax Debt From a
Individuals or individuals operating as a disregarded single member LLC taxed as
Limited Liability Company (LLC)
a sole proprietor, tax debts (including employment taxes) incurred before January
1, 2009 may be included on one Form 656. However, in those instances where an
LLC incurred employment taxes after January 1, 2009 or excise taxes after
January 1, 2008, two Forms 656 must be sent with a separate application fee and
initial payment for each offer, even if the tax debts were reported under the same
Tax Identification Number. One Form 656 will be for the individual tax debts while
the second Form 656 will be for the LLC employment tax debts incurred after
January 1, 2009 and excise tax debts after January 1, 2008.
COMPLETING THE APPLICATION PACKAGE
Step 1 – Gather Your Information
To calculate an offer amount, you will need to gather information about your
financial situation, including cash, investments, available credit, assets, income,
and debt.
You will also need to gather information about your average household's gross
monthly income and expenses. The entire household includes all those in addition
to yourself who contribute money to pay expenses relating to the household such
as, rent, utilities, insurance, groceries, etc. This is necessary for the IRS to
accurately evaluate your offer.
In general, the IRS will not consider expenses for tuition for private schools,
college expenses, charitable contributions, and other unsecured debt payments as
part of the expense calculation.
Step 2 – Fill out Form 433-A
Fill out Form 433-A (OIC) if you are an individual wage earner and/or operate as a
(OIC), Collection Information
sole proprietor, a disregarded single member LLC taxed as a sole proprietor or are
Statement for Wage Earners and
submitting an offer on behalf of a deceased individual. This will be used to
Self-Employed Individuals
calculate an appropriate offer amount based on your assets, income, expenses,
and future earning potential. You will have the opportunity to provide a written
explanation of any special circumstances that affect your financial situation.
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