Submitting an Offer in Compromise
What is involved in submitting an offer in compromise? Is it just a short application? Unfortunately, no. The process of submitting an offer in compromise is fairly tedious. It requires you to complete several in-depth IRS forms about your financial situation to help you (and the IRS) determine if you will qualify for an offer in compromise. You must also fill out the offer in compromise application (form 656). Along with you financial information you will be required to gather a minimum of three months bank statements, mortgage statements, and other bills and receipts to prove your monthly living expenses.
Once you have completed your paperwork, you must submit an application fee of $150.00 and a down payment of an amount determined by the type and amount you are offering to the IRS. Common down payment values are 20% of the offer in compromise amount if you are doing a lump-sum payment or the first month’s payment if you are making monthly installments on your offer in compromise.
When you submit your offer in compromise, I suggest that you mail it to the IRS via US Certified Mail, Return Receipt Requested so that you can prove the date the IRS received your offer in compromise. This rule applies to everything that you send to the IRS. I can’t tell you the amount of times that I have had to call the IRS on the carpet for dismissing/denying an offer in compromise because they claimed they did not receive a requested document and I was able to prove that they, in fact, did receive the documents on time.
Hope that helps with your offer in compromise submissions.