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The 20 percent payment is generally nonrefundable, meaning it wont be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance. Instead, the 20 percent payment will be applied to the taxpayers tax liability.
For the IRS to accept an offer, you must file all tax returns due and be current with estimated tax payments or withholding. If you own a business and have employees, you must file all returns and be current on all your federal tax deposits.
Submit Your Application Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms. Form 656(s) you must submit individual and business tax debt (Corporation/ LLC/ Partnership) on separate Forms 656. $205 application fee (non-refundable)
This payment is required in addition to the application fee. The 20 percent payment is generally nonrefundable, meaning it wont be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance. Instead, the 20 percent payment will be applied to the taxpayers tax liability.
An application for an IRS offer in compromise has three parts: Completed IRS forms 433-A and 656. If you believe the tax debt isnt yours or doesnt actually exist, you can also file Form 656-L. A $205 application fee, which is nonrefundable, but may be waived if you meet the IRS low-income guidelines.
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Processing times vary, but you can expect the IRS to take at least six months to decide whether to accept or reject your Offer in Compromise (OIC). The process can take much longer if you have to dispute the examiners findings or appeal their decision.
Step 1 Gather Your Information. Step 2 Fill out Form 433-A. Step 3 Fill out Form 433-B (OIC), Step 4 Attach Required. Step 5 Fill out Form 656, Offer. Step 6 Include Initial Payment. Step 7 Mail the Application.

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