A transaction offer is an agreement between a taxpayer and the IRS that settles a tax debt for less than the total amount owed. A transaction offer is an option when a taxpayer cannot fully pay their tax liability. It is also an option when paying the full tax bill would cause financial difficulties for the taxpayer. The goal is to achieve a commitment that meets the best interests of both the taxpayer and the agency.
You can do this with a letter detailing the amount of the new offer (if it's within 30 days of the rejection) or by filling out a new Form 656 (if it's after 30 days or after the appeal). Therefore, the designee cannot represent you in a collection matter, such as a transaction offer, before the IRS. With a transaction offer, you can settle your tax debt with less than what you currently owe (sometimes much less). If you send MORE than the required amount AND designate the payment as a deposit on Form 656, Pledge Offer, any payment that exceeds the required amount is refundable.
A returned offer is different from a rejection because there is no right to appeal when the IRS returns the offer. If you qualify for low-income certification and have checked the box, the money will be held as a deposit until a decision is made on your offer. The first step in making a transaction offer is to make sure you're up to date with your tax returns. A 656 form with an application fee and an offer to pay if you are committing social or corporate responsibility.
The brochure also includes forms that taxpayers must complete as part of the commitment offer process. If you owe a significant amount in back taxes and can't repay the full amount, making a commitment offer to the Internal Revenue Service (IRS) could be your best course of action. You can complete the transaction offer prequalification tool to find out if you are eligible for a transaction offer. Periodic payment offer: An offer is called a periodic payment offer under tax law if it is paid in 6 or more monthly installments and within 24 months after the offer is accepted.
Find the forms for submitting an application and step-by-step instructions in Form 656-B, commitment offer brochure in PDF. You can use the Offer in Compromise prequalification tool to confirm your eligibility and prepare a preliminary proposal. Anyone can apply for a transaction offer, but getting help from a tax relief company can make the process easier, especially if you owe a large amount of money.