Offer in Compromise Forms updated

On March 28, 2016 the Internal Revenue Service has updated Form 656 Booklet, Offer in Compromise. It contains new editions of Form 433-A(OIC), Form 433-B(OIC) and Form 656, revised in February 2016.

PitBullTax Software has updated all these Forms and linked tools.

What's new on Form 433-A(OIC) in comparison with previous revision of January 2015?

  • New question has been added under "Other Information" section whether client transferred any real property in the past 3 years.
  • Quick Sale Value for Retirement Accounts has been changed from 70% to 80%. However, remember, that PitBullTax Software allows you to account for additional expenses if your client has to pay early distribution penalty and/or higher federal/state taxes on the distribution.

What's new on Form 433-B(OIC) in comparison with previous revision of January 2015?

  • New question has been added under "Other Information" section whether client transferred any real property in the past 3 years.

What's new on Form 656 in comparison with previous revision of January 2015?

  • Low Income Certification table has been updated. Please note that guidelines have been slightly increased and that could potentially require your client to pay $186 processing fee and 20% initial payment.
  • New question has been added in Section 6 (prior Section 7) about tax payment requirements, you now have to indicate whether your client is compliant with estimated tax payments requirements.
  • Offer Terms have been updated to include several new provisions:
    • The refund offset for the calendar year the offer has been accepted in does not apply to offers accepted under the provisions of Effective Tax Administration based on public policy/equity considerations.
    • If the IRS served a continuous levy on wages, salary, or certain federal payments under IRC Sec. 6331(e) or (h), then the IRS could choose to either retain or release the levy even after the offer is in pending status.
    • If final payment on accepted offer is more than the agreed amount by $50 or less, the IRS will not return the difference and will apply the entire overpayment to tax debt. Overpayments exceeding $50 will be returned to taxpayer.
    • The federal tax lien will be released 30 days after the payment terms of accepted offer have been satisfied and the payment has been verified.
  • Section "Third Party Designee" has been removed. At least this will avoid lots of confusion for paid preparers, who always wanted to put their information in that section as well.
  • For clients residing in Montana, South Carolina and Wyoming you now have to submit their offers to Brookhaven COIC Unit, instead of Memphis COIC Unit. Step-by-Step Workflow section, Submit Your Case to the IRS, has been updated accordingly.

What's new in Resolution Evaluation tool?

  • Quick Sale Value for Retirement Accounts has been changed from 70% to 80%.

If you still see the old revision of these Forms on your PC, please press CTRL and F5 simultaneously on your keyboard. This should refresh the memory and bring forward the update.

If you have recently prepared Offer in Compromise case, but didn't submit it yet, please make sure to address all points above before printing your final forms. Remember, that IRS standards have been reduced on March 28, 2016 and this would potentially change your offer as well. Please note that Form 433-A and Form 433-B have not been revised by the IRS yet and the software has the latest revision of December 2012, only OIC Forms have new revision date of February 2016.

Should you have any questions in regards to these new updates, please feel free to contact our customer service representatives at 877-474-8285.

Posted by PitBullTax Administrator at 04/04/2016 01:46:53 PM
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