The tax laws are constantly changing; the economy is constantly changing. So it only makes sense that the IRS will periodically change their rules for collection alternatives to keep up with the changing times. One big change made recently is the IRS revamped their Offer in Compromise process.
Before the change, the Offer in Compromise form 656 included checkboxes for 3 different types of offers: Doubt as to Liability, Doubt as to Collectability, and an Effective Tax Administration offer. The taxpayer or their representative would then check the box for one of the three Offer Programs under which they were submitting the Offer. The same three offers exist today; however, the form for a Doubt as to Liability Offer now has its own separate form number: 656-L. This makes sense, because a Doubt as to Liability Offer has absolutely nothing to do with a taxpayer's ability to pay, as do the other two types of offers. Therefore, the format for the Doubt as to Liability is now conducive to cases like Identity Theft cases, for instance, who are advocating for a tax settlement based on the premise that the tax liability is not genuinely theirs.
The latest change made by the IRS is not to the form 656 itself, but rather to the way in which one prepares the offer for a Doubt as to Collectability Offer. That is, the IRS used to have one form for determining a person's ability to pay: a form 433-A. This form would then be used with an OIC worksheet found in IRS Publication 656-B (B for Booklet) to input mathematical formulas to determine an appropriate Offer in Compromise proposal figure. NOW, it is all different. NOW the IRS has a separate form 433-A specifically for Offer in Compromises and it is formatted as a 433-A and OIC worksheet all in one. Now, this is government efficiency in action, right?
For help submitting an Offer in Compromise, or for more information on them, call my office today at 607-1192...and stay-tuned for more free information on my webpage.