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Form 656-B runs on a different rhythm than a seasonal income tax return. The 8-page Form 433-A (OIC) or 6-page Form 433-B (OIC) wants current bank, investment, retirement, vehicle, and real-property documentation, with 3 months of personal bank statements or 6 months for business accounts, and the 24-month deemed-acceptance clock does not start until the centralized COIC Unit in Memphis or Brookhaven actually receives the package. A team that handles a handful of these a year cannot lean on tax-season muscle memory to keep the files moving.
The work stalls in predictable spots: the $1,000 bank balance allowance and $3,450 vehicle allowance applied to people who do not qualify for them, retirement accounts entered at full market value instead of the 0.8 quick-sale figure, Lump Sum versus Periodic Payment confusion, and a missing copy of any return filed within 10 weeks of submission. The application fee is $205, waived under Low-Income Certification, and the offer is paid either as a Lump Sum or as Periodic Payments over 6 to 24 months. This is the April 2026 revision.
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 (which the IRS splits on Form 656 Section 3 into ETA-Economic Hardship and ETA-Public Policy or Equity). 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 20% or first installment is applied to your tax liability and not sent back, while the application fee itself is only returned when the IRS cannot process your offer (for example, when required returns are unfiled).
After You File, What Happens Next
The IRS pauses most collection activity while it evaluates a processable offer, though levy action can continue up until an authorized IRS official signs and acknowledges your offer as pending and the IRS may keep any proceeds it collects from those levies, and your offer is automatically accepted if the IRS does not make a determination within two years of the date the centralized COIC unit in Memphis or Brookhaven receives it, 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 returned by the IRS, and a return decision cannot be appealed, 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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 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 (only IRS rejections are appealable; if the IRS returns your offer for unfiled returns, missed periodic payments, or other non-compliance, that decision cannot be appealed).
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.
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 within 5 months of acceptance |
| 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.
Common Mistakes We See Every Season
OIC packages fail in the same places year after year, and almost all of those failures are documentation, not eligibility. The pattern below covers the errors my team sees most often when we audit Form 656-B packets that came back from the IRS for correction.
Reusable Checklists
These three lists are copy-paste ready for a firm SOP, an Individual Online Account submission, or a personal filing folder. Each one removes a specific failure mode we see in Form 656-B packages every season.
Pre-submission packet review
- Form 656 signed and dated under penalties of perjury, with the correct offer basis selected in Section 3 (Doubt as to Collectibility or Effective Tax Administration) and every tax period listed.
- Form 433-A (OIC) for individuals and sole proprietors OR Form 433-B (OIC) for corporations, partnerships, and LLCs, with all signatures complete in Section 10 (433-A) or Section 7 (433-B).
- 3 months of personal bank statements for every account on Form 433-A (OIC) Lines 1a-1c, OR 6 months of business bank statements for each Form 433-B (OIC) account.
- $205 application fee as a separate check or money order payable to United States Treasury (skip if Low-Income Certified).
- Initial payment, 20% for Lump Sum or first monthly installment for Periodic Payment, as a separate check or money order (skip if Low-Income Certified).
- Copy of any tax return filed within 10 weeks of submission, clearly marked as a copy. No original returns.
- Signed Form 2848 if a representative will act on the taxpayer's behalf during the offer investigation.
- Photocopies only of all supporting documentation, never originals.
- Confirmed mailing address: Memphis IRS Center COIC Unit for AL, AZ, CA, CO, GA, HI, ID, KY, LA, MD, MS, ND, NM, NV, OK, OR, SD, TN, TX, UT, VA, WA; Brookhaven IRS Center COIC Unit for all other states, territories, and foreign addresses.
Form 433-A (OIC) Section 3 asset reconciliation
- Lines 1a-1c: bank, checking, savings, and other cash accounts. Apply the $1,000 individual allowance only after confirming the liability cannot be fully paid from equity or an installment agreement.
- Lines 2a-2d: investment accounts and digital assets at current market value.
- Lines 3a-3b: retirement accounts at current market value times 0.8.
- Lines 4a-4b: cash value of life insurance, not face value.
- Lines 5a-5c: real property at current market value times 0.8 less any encumbrance.
- Lines 6a-6e: vehicle current market value times 0.8, less $3,450 allowance per vehicle. Joint filers may take an additional $3,450 on a second vehicle on Line 6d.
- Lines 7a-7c: other valuable items, less the $11,980 IRS deduction.
- Box A: sum of Lines 1 through 7 equals Available Individual Equity in Assets.
- Box F (Remaining Monthly Income) times 12 equals Box G for Lump Sum offers, OR times 24 equals Box H for Periodic Payment offers.
- Confirm the offer amount on Form 656 is equal to or greater than the calculated minimum.
Post-acceptance 5-year compliance handoff
- Calendar the offer acceptance date and the 5-year future compliance end date in the client file.
- Set quarterly reminders for estimated tax payments for the taxpayer and any business in which the taxpayer holds an interest.
- Calendar annual filing deadlines for individual, business, and payroll returns through the full compliance period.
- Track the first payment due date, which is 30 calendar days after acceptance for Low-Income Certified taxpayers unless another date is agreed.
- Watch for the federal tax lien release, generally within 45 days after the final payment has been received and verified.
- Flag any refund for a tax period extending to or beyond the acceptance date and return it to the IRS within 30 days.
- Document that no amended return will be filed for any compromised tax period. Filing one while the offer is still pending is grounds for termination, and after acceptance it conflicts with the Treas. Reg. § 301.7122-1(e)(5) conclusive-settlement agreement on Form 656.
- Note the public inspection window. The IRS makes certain accepted-offer information available for one year after the acceptance date.
Keep 656-B Season From Stalling
OIC work moves at a different cadence than seasonal compliance. The 8-page Form 433-A (OIC) and 6-page Form 433-B (OIC) demand current bank, investment, retirement, vehicle, and real-property documentation, and the 24-month deemed-acceptance clock does not begin until the centralized COIC Unit in Memphis or Brookhaven actually receives the package (per IRS Form 656-B, Rev. April 2026). A team that handles a few of these a year cannot rely on tax-season muscle memory to keep the files moving.
Most stalls happen in the same places: full market value entered on retirement accounts that should carry the 0.8 quick-sale multiplier, individual-only $1,000 bank and $3,450 vehicle allowances applied to business filings, periodic payments missed mid-review, the wrong COIC mailing address, and 5-year future compliance reminders that never made it onto a calendar. None of these are hard problems. They are documentation problems a disciplined pipeline removes before the file ever ships.
- Pre-compute the 0.8 multiplier across Form 433-A (OIC) Lines 3a-3b (retirement), 5a-5c (real property), and 6a-6e (vehicles) so the asset workbook never carries full market value into Box A.
- Gate the $1,000 bank balance allowance and the $3,450 vehicle allowance behind an entity-type check: individuals and sole proprietors only, and only after the IRS finds the liability cannot be fully paid from equity or an installment agreement.
- Hard-code Box G (Box F times 12 for Lump Sum) and Box H (Box F times 24 for Periodic Payment) into the Section 8 worksheet so the offer amount entered on Form 656 always equals or exceeds the calculated minimum.
- Pre-route the mailing label by state: Memphis IRS Center COIC Unit (P.O. Box 30803, AMC, Memphis, TN 38130-0803) for AL, AZ, CA, CO, GA, HI, ID, KY, LA, MD, MS, ND, NM, NV, OK, OR, SD, TN, TX, UT, VA, WA; Brookhaven IRS Center COIC Unit (P.O. Box 9007, Holtsville, NY 11742-9007) for all other states, territories, and foreign addresses.
- Calendar the 5-year future compliance window from the acceptance date the day the letter arrives, with estimated-tax and filing reminders for the taxpayer and any related business, since one missed obligation can default the offer and restore the original debt plus accrued penalties and interest.
Accountably runs OIC packages on documented SOPs with layered preparer, senior, and quality review. If files are stuck on Form 433-A (OIC) clean-up, missing statements, or a 24-month deemed-acceptance clock that already started, our tax services team can take that load.
FAQs
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 offset them against your underlying tax debt, but those offset refunds are not counted as payments toward your offer amount. Details appear in the FAQs and your acceptance letter.