Form 656-L – Offer in Compromise (Doubt as to Liability)

Form 656-L, known as Offer in Compromise (Doubt as to Liability), is a critical tax resolution tool for individuals or businesses who question the accuracy of their tax liability. This form is utilized when taxpayers believe they do not owe the full amount of taxes assessed by the IRS due to doubts regarding the underlying tax liability.

Key Features and Components:

• Explanation of Doubt as to Liability: Taxpayers can use Form 656-L to dispute the amount of taxes owed based on the belief that the IRS has incorrectly assessed their tax liability.
• Offer Amount: Taxpayers must propose an offer amount to settle the disputed tax liability, usually lower than the IRS’s assessment.
• Supporting Documentation: Providing detailed documentation and evidence to support the claim of doubt as to liability is crucial for a successful offer.

Relevant Filing and Compliance Requirements:

When submitting Form 656-L, taxpayers must adhere to specific filing requirements outlined by the IRS. This includes providing accurate financial information, supporting documentation, and any other details necessary to support the doubt as to liability claim.

Penalties or Consequences for Non-Compliance:

Failure to comply with the IRS’s guidelines when submitting Form 656-L can result in rejection of the offer, leading to continued tax liability and potential enforcement actions by the IRS.

Importance in Tax Resolution and Financial Compliance:

Form 656-L offers taxpayers a way to address disputes with the IRS regarding their assessed tax liability. By utilizing this tool effectively, taxpayers can potentially reduce their tax burden and resolve disagreements with the IRS, ultimately aiding in financial recovery and compliance.