In 2011 the IRS issued a new offer in compromise form. Taxpayers proposing compromises based upon doubt as to collectibility of effective tax administration must submit revised Form 656. Taxpayers proposing an offer based upon doubt as to liability must now submit Form 656-L and a narrative setting forth defenses to the liability. To comply with the new downpayment requirements taxpayers must submit Form 656-PPV with the required downpayment.
The IRS recently issued new guidance on Offers in Compromise (OIC), continuing a trend of liberalizing rules for compromise of outstanding tax obligations. The new rules allow more discounts of asset values and in turn leads to the ability to compromise a liability for less than in the past. The IRS last made significant changes to its offer program in 2012 and that has resulted in a dramatic increase in the acceptance rate.