Form 656-B – OIC Guide, Low-Income, Fees, Addresses

I still remember the first time I walked a client through an Offer in Compromise. We were sitting at a kitchen table covered with bank statements and a half-finished cup of coffee, and the tension was real. You might be there now, wondering if Form 656-B can help you settle for less and finally breathe. If that is you, you are not alone, and yes, you can do this with a clear plan, clean paperwork, and steady follow through.

The goal is not a miracle, it is a realistic agreement that reflects what you can actually pay and what the IRS can reasonably collect.

Key Takeaways

• Form 656-B is the IRS Offer in Compromise booklet. It includes Form 656 plus the financial statements, Form 433-A (OIC) for individuals and Form 433-B (OIC) for businesses.
• Two main grounds fit inside Form 656-B, Doubt as to Collectibility and Effective Tax Administration. If your issue is doubt as to liability, use Form 656-L instead.
• The application fee is still 205 in 2025, and you include an initial payment unless you qualify for Low-Income Certification, which waives both.
• You can now file an OIC online through your Individual Online Account, and the IRS also allows email submission to designated sites. Paper filing by mail is still accepted. Follow the current Form 656-B for where to send it.
• Initial OIC payments are generally nonrefundable, with narrow exceptions in the Internal Revenue Manual. Know the difference between nonrefundable “TIPRA” payments and true deposits before you send money.

What Form 656-B Actually Is

Form 656-B is the IRS’s complete Offer in Compromise booklet. It packages the application itself, Form 656, and the required Collection Information Statements, Form 433-A (OIC) for wage earners or self-employed individuals and Form 433-B (OIC) for businesses. The current IRS page confirms these inclusions and points you to the latest revision, which you should always use to avoid delays.

Inside the booklet, you will see the two OIC bases that belong here:

• Doubt as to Collectibility, when your income and assets cannot cover the full debt within a reasonable period.
• Effective Tax Administration, when you technically could pay but doing so would cause serious hardship or be inequitable.

If your dispute is about the amount of tax itself, that is doubt as to liability, and it uses a different form, Form 656-L, with different payment rules.

What Changed for 2025, So You Do Not Trip Over Old Advice

• The 205 fee and initial payment rules remain in place. If you meet the Low-Income Certification guidelines in Form 656, you do not send the fee or the initial payment, and you do not have to make monthly installments while the IRS reviews your offer.
• You can file an OIC online through your Individual Online Account. The IRS also notes you may email your package to one of two designated sites, or still mail it per the booklet’s addresses. This is a big shift from the old “mail only” world.
• If the IRS cannot process your offer, it returns your application and the fee. Payments that accompanied a valid, processable offer are applied to your liability and are generally not refunded, with limited exceptions described in the IRM.

When You Should Use Form 656-B

Use Form 656-B when your case fits Doubt as to Collectibility or Effective Tax Administration, and you are current on the basics, filed required returns, made required estimates or deposits, and you are not in an open bankruptcy. The IRS repeats these points across its main OIC page and FAQs.

Doubt as to Collectibility, Your Checklist

If your income and assets cannot reasonably cover the debt, assemble a clean, consistent file:

What to include	Why it matters
Form 656 plus Form 433-A (OIC) or 433-B (OIC)	Establishes your offer and full financial picture
205 application fee and initial payment, unless Low-Income Certified	Required to process most offers
Proof of income, assets, debts, and expenses	Supports Reasonable Collection Potential analysis

The IRS evaluates your ability to pay based on income, allowable expenses, and equity in assets. If you propose a Lump Sum Cash offer, send 20% with the application. If you propose a Periodic Payment offer, send the first installment and keep paying monthly while the offer is under review, unless you qualify for the Low-Income waiver.

Effective Tax Administration, When Paying Would Cause Hardship

Choose Effective Tax Administration when you could technically full pay, but doing so would lead to serious economic hardship or would be unfair. You still include Form 656 and a full Form 433-A (OIC) or 433-B (OIC), then attach a precise hardship statement with documentation, such as medical records or long-term care obligations. The fee and initial payment rules are the same, with Low-Income Certification waiving both.

Keep your hardship statement specific, short, and evidence based. Think dates, diagnoses, care requirements, and actual monthly costs, not generalities.

Eligibility Limits, Special Situations, and Common Roadblocks

Here is the fast screen. You need to be current on filings and estimates, not in an open bankruptcy, and you must use the newest Form 656-B package. If you are an employer, make sure you have made your required federal tax deposits for the current and prior two quarters before you apply.

• Filed all required returns and made required estimated payments.
• Not in an open bankruptcy proceeding.
• Employers made required deposits for the current and past two quarters.
• Using the current booklet and forms.

If you apply and the IRS cannot process your offer, it will return your application and your fee. Any money you sent as an initial payment with a processable offer is usually applied to your balance, not refunded.

Doubt as to Liability Does Not Use Form 656-B

If your dispute is that the liability itself is wrong, you use Form 656-L. No TIPRA payments are required for doubt as to liability, and you should not try to shoehorn a DATL case into Form 656-B.

Geographic and access notes

The IRS encourages you to check eligibility with the Offer in Compromise Pre‑Qualifier and through your Individual Online Account. If online tools are unavailable for your situation, you can still file the paper package from the booklet. The IRS emphasizes using the latest booklet, since addresses and procedures can change after a printed run.

Required Forms and Documents, What To Gather

Form 656-B is your hub. It includes:

• Form 656, Offer in Compromise.
• Form 433-A (OIC) for individuals, wage earners, and self‑employed.
• Form 433-B (OIC) for businesses.

Build a complete packet:

• Form 656 with the correct offer basis selected.
• The right 433 form, signed and dated, with full backup, bank statements, proof of income, asset statements, debt statements, and an expense breakout that aligns with IRS standards or includes a short variance explanation.
• 205 application fee and the initial payment, unless Low‑Income Certified.

Pro tip from the field, keep your monthly expense totals consistent across Form 433, bank statements, and pay stubs. Mismatches stall cases and invite extra questions during review.

Fees, Low-Income Certification, and Payment Options

• Application fee, 205, nonrefundable unless the IRS cannot process your offer.
• Initial payment is required for each Form 656, unless Low‑Income Certified. Lump Sum Cash offers include 20% with the application. Periodic Payment offers include the first installment, then continue monthly while the IRS reviews the case.
• Low-Income Certification, if you qualify based on the chart in Section 1 of Form 656 or based on current household monthly income times 12, waives the fee, the initial payment, and the requirement to pay monthly while your offer is pending.

About refunds, the IRM confirms that required TIPRA payments are generally not refundable, with limited exceptions. If the IRS deems an offer not processable, it returns the package and, in specific circumstances, can refund certain payments. Most of the time, though, the application fee and the 20% or first installment are applied to your tax liability, not sent back.

After You File, What Happens Next

The IRS pauses most collection activity while it evaluates a processable offer, and your offer is automatically accepted if the IRS does not make a determination within two years of the receipt date, not counting any appeal period. Keep sending periodic payments if that is your chosen option, unless Low‑Income Certified.

Missed periodic payments can get the offer withdrawn, so set up reminders and use EFTPS, Direct Pay, or your Individual Online Account where possible.

How To Complete the Forms Without Getting Stuck

Here is a simple flow I use with clients and teams. It keeps reviewers happy and speeds up decisions.

1. Choose your offer basis on Form 656

• Doubt as to Collectibility or Effective Tax Administration, then check the right boxes and list every tax period. If it is a liability dispute, stop and use Form 656-L instead.

2. Select your payment option

• Lump Sum Cash, include 20% now and the balance in five or fewer payments if accepted.
• Periodic Payment, include the first installment now and keep paying monthly during review unless Low‑Income Certified.

3. Draft a tight ETA statement if you claim hardship

• Keep it factual and documented, think dated medical letters, insurance denial letters, eldercare invoices, or specialized equipment receipts.

4. Complete the right Form 433

• Individuals use 433‑A (OIC), businesses use 433‑B (OIC). Reconcile income and expenses to documents and to each other. If you claim standards-based expenses that are higher than local standards, add a short, clear explanation.

5. Attach payments correctly

• Separate checks for the 205 fee and the initial payment help the IRS apply funds properly. If you prefer electronic, use EFTPS, Direct Pay, or your Individual Online Account. Label the payment as an OIC payment.

6. Quality check before you submit

• Dates, signatures, SSNs or EINs, tax periods, bank statements, pay stubs, mortgage and vehicle statements, and any schedules that support asset equity. Small typos can cause long delays.

Where and How to File in 2025

You now have three pathways:

• File online through your Individual Online Account.
• Email your application package to one of the two designated IRS sites, per the current Form 656-B.
• Mail your package to the correct COIC Unit, using the state mapping and addresses in the current booklet. The IRS also publishes overnight street addresses for Memphis and Holtsville in the IRM.

Because the IRS updates addresses more often than printed booklets, always confirm with the newest Form 656-B before you send anything. If you ship overnight, the IRM lists street addresses for Memphis, 5333 Getwell Rd, Stop 880, Memphis, TN 38118, and Holtsville, 1040 Waverly Ave, Stop 680, Holtsville, NY 11742.

Where to Send Periodic Payments After Filing

If you filed a periodic payment offer, you will get a letter with a Form 656‑PPV payment voucher. The IRS directs subsequent periodic payments to different P.O. Boxes depending on where you sent the original offer, and it also accepts payments through EFTPS, Direct Pay, or your Individual Online Account, select the Offer in Compromise option.

Alternatives if an OIC Is Not the Best Fit

• Installment agreement, set up online in most cases, often same day. The IRS outlines short term and long term plans and typical balance thresholds.
• Penalty relief, consider first time abatement or reasonable cause where appropriate, which can ease the total you owe.
• Appeal a rejection with Form 13711 within 30 days if you disagree with the decision.

A quick caution, the IRS has warned repeatedly about “OIC mills” that charge steep fees and make unrealistic promises. Stick to credible sources, your own account on IRS.gov, or a licensed tax professional.

For CPA and EA Firms

If you manage OIC work inside a firm, build a repeatable workflow. In our experience supporting teams, standardized checklists for 433-A/433-B exhibits, consistent file naming, and early escalation on income or asset mismatches reduce review loops and missed items. Keep a staging folder for “proof ready” items, use a one‑page RCP summary for the reviewer, and document any variance from standards in one paragraph, not a separate memo. That simple discipline saves partner time and speeds client relief.

If your team struggles with volume, structured delivery beats heroics, every time.

Accountably’s work with firms focuses on disciplined execution, not resume stacks, so if you need controlled capacity for OIC packages during peak season, a standardized offshore review lane can stabilize throughput without sacrificing quality. Keep this light touch in mind if your bottleneck is production, not sales.

FAQs, Clear and Direct

What is IRS Form 656-B in plain English?

It is the Offer in Compromise booklet. You use it to assemble Form 656 and either Form 433‑A (OIC) or 433‑B (OIC), then submit with the 205 fee and the initial payment unless Low‑Income Certified. You can file online, email to a designated site, or mail to the correct COIC Unit listed in the booklet.

Who is eligible for an Offer in Compromise?

You must be current on filings and estimates, not in open bankruptcy, and either unable to pay in full or facing serious hardship for ETA. Employers must be current on deposits. The IRS provides a pre‑qualifier and now allows checks through your Individual Online Account.

What are the downsides of an OIC?

You must disclose detailed finances, stay fully compliant afterward, and accept that required payments are generally nonrefundable. Processing can take time, and the IRS may file a federal tax lien during review. If you default, collection resumes.

Does the “Fresh Start” program mean I will qualify?

No, it is not a guarantee. “Fresh Start” expanded tools like payment plans, but OIC acceptance still depends on your facts, income, expenses, and assets. Check eligibility with the IRS tool and your Individual Online Account, then decide if OIC or a payment plan fits better.

What happens to my refunds during and after an accepted offer?

The IRS can keep certain refunds through the acceptance date, and later refunds can be applied to your offer balance if you request it in writing. Details appear in the FAQs and your acceptance letter.

Quick Reference Tables

OIC payment options

Option	What you send with the offer	After acceptance
Lump Sum Cash	20% of the offer amount now	Pay the rest in five or fewer payments
Periodic Payment	First proposed monthly payment now, then monthly during review	Continue monthly until paid in full

Source, IRS OIC overview.

Which form do I use?

Situation	Form
Doubt as to Collectibility	Form 656 inside Form 656-B, with 433‑A (OIC) or 433‑B (OIC)
Effective Tax Administration	Form 656 inside Form 656-B, with 433‑A (OIC) or 433‑B (OIC)
Doubt as to Liability	Form 656‑L, separate booklet, no TIPRA payment required

Sources, IRS About Form 656 and IRM Appeals overview.

Final Steps and A Calm Close

If you are ready to move forward, here is your short action list:

• Confirm eligibility with the IRS pre‑qualifier and your Individual Online Account.
• Download the newest Form 656-B and use its checklist.
• Choose Lump Sum or Periodic and attach the correct payments, or confirm Low‑Income Certification.
• Build a complete 433 package with clean documentation.
• Submit online, email to a designated site, or mail to the correct COIC Unit listed in the current booklet. For overnight mail, the IRM lists street addresses for Memphis and Holtsville.