IRS Form 656: Offer in Compromise
Purpose: Apply to settle IRS tax debt for less than the full amount owed
Who files: Taxpayers who cannot pay their full tax liability
IRS Form 656 is your formal application to settle your tax debt through an Offer in Compromise.
Before You Start
Make sure you have all tax returns filed, your most recent notice, and financial records.
Key Sections
Section 1: Personal Information
Your name, SSN, address, and tax periods.
Section 2: Offer Amount
The total amount you’re offering.
Section 3: Payment Terms
Choose lump sum or periodic payment.
Application Fee
The IRS charges $205, waived for low-income applicants.
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Last updated: April 7, 2026