Understanding the Purpose of Form 656

Form 656 serves as the official application for individuals or businesses seeking an OIC from the IRS. It provides detailed information about the taxpayer's financial situation, supporting their request for a reduced settlement amount. The purpose of Form 656 is to demonstrate to the IRS that the taxpayer is unable to pay the full tax debt within a reasonable timeframe, making a compromised settlement the best resolution.

Gathering the Necessary Documentation

Before tackling Form 656, it is crucial to gather all the necessary documentation. This includes:

• Detailed financial statements: Provide a comprehensive overview of your income, expenses, assets, and liabilities.

• Proof of income: Submit recent pay stubs, profit and loss statements, or any other relevant documentation that supports your reported income.

• Bank statements: Include statements from all your bank accounts to substantiate your financial standing.

• Investment...