IRS offer in compromise application checklist

1. Confirm the debt and legal basis

List each federal tax form and period to be included.
Confirm that the balance belongs to the IRS, not a state or local revenue agency.
Choose doubt as to collectibility, effective tax administration, or the separate doubt-as-to-liability route.
Use Form 656-L only for a genuine dispute about whether the tax is owed or correctly calculated.

All required federal returns are filed.
Required current-year estimated tax payments are made.
At least one included tax debt has been billed.
No open bankruptcy proceeding exists.
An employer has made current-quarter and prior-two-quarter federal tax deposits.

Form 656-B, revision April 2026, for doubt as to collectibility or effective tax administration.
Form 433-A (OIC) for an individual, wage earner, self-employed person, or qualifying estate.
Form 433-B (OIC) for a corporation, partnership, or LLC treated as a business entity.
Form 656-L, revision July 2026, for doubt as to liability.

Check the official Form 656 page again on the day of filing. Do not rely on a saved PDF if the IRS has replaced it.

Recent bank, investment, retirement, and digital-asset statements requested by the form.
Vehicle and real-estate ownership, loan, and value information.
Current income records, including wages, self-employment, benefits, and other household contributions.
Housing, utilities, insurance, transportation, health, tax, court-ordered, and other required expense records.
Business accounts receivable, assets, payroll, and deposit records when applicable.
Copies—not originals—of each attachment required by Form 433-A (OIC) or 433-B (OIC).

Complete every asset, income, expense, and future-income section.
Use the IRS pre-qualifier only as a preliminary guide.
Explain special circumstances with specific facts and supporting documents.
Make sure the Form 656 offer amount is not lower than the calculated minimum unless the form instructions support an exception.

Lump sum: 20% initial payment; remaining accepted amount in five or fewer payments within five or fewer months.
Periodic payment: first proposed installment with the application; continue monthly proposed payments while the offer is pending.
Low-Income Certification: check the current Section 1 chart; qualifying individuals and sole proprietors do not send the fee or offer payments during review.

$205 application fee for each ordinary Form 656 unless the Low-Income Certification applies.
Separate fee and initial-payment transactions.
Correct OIC payment type selected in the electronic system.
Electronic Funds Transfer number recorded on Form 656 when required.
Separate checks payable to “United States Treasury” if electronic payment is unavailable.

Every required form is signed and dated.
Both spouses sign when required for a joint offer.
Separate Forms 656 are prepared for individual and non-sole-proprietor business debts.
Legally separated or divorced people follow the separate-offer rules in the current booklet.
An authorized representative uses the correct power-of-attorney form; Form 8821 alone does not authorize representation.