What is an Offer in Compromise?

An Offer in Compromise (O/C) is an agreement between the taxpayer and the government that settles a tax liability for payment of less than the full amount owed.

The Service will generally accept an OIC when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential. An OIC is a legitimate alternative to declaring a case currently not collectible or to a "protracted installment agreement." The goal is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the government.

Note: A "protracted installment

agreement" is defined as being one that extends beyond the period allowed under IRS issued guidelines.

The success of the Offer in Compromise program will be assured only if taxpayers make adequate compromise proposals consistent with their ability to pay and the Service makes prompt and reasonable decisions. Taxpayers are expected to provide reasonable documentation to verify their ability to pay. The ultimate goal is a compromise which is in the best interest of both the taxpayer and the Service. Acceptance of an adequate offer will also result in creating for the taxpayer an expectation of, and a fresh start toward, compliance with all future filing and payment requirements.

. Doubt as to Collectibility. Doubt exists that you could ever pay the full amount of tax owed. Before the IRS can consider a doubt as to collectibility offer (absent special circumstances), the taxpayer must not be able to pay the taxes in full either by liquidating assets or through current installment agreement guidelines. You must submit the appropriate collection information statement along with

all required supporting documents.

. Doubt as to Liability. This means that doubt exists that the assessed tax is correct. Do not use this reason if the sole basis for filing an offer is because you are unable to pay the tax liability. If you do not think that you owe the tax liability, then you may submit an OIC for "Doubt as to Liability" (see Item 6 on Form 656). You must submit a detailed written statement explaining why you believe you do not owe the tax that you want to compromise. You are not required to submit a collection information statement if you are submitting an offer on this basis alone.

. Effective Tax Administration (ETA). This means that the taxpayer does not have any doubt that the tax is correct and there is no doubt that the full amount of tax owed could be collected, but an exceptional circumstance exists that would allow us to consider your offer. To be eligible for compromise on this basis, you must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable. If you are requesting an ETA offer, you must submit:

1. A collection information statement

with all appropriate attachments, and

2. A written narrative explaining your special circumstances and why paying the tax liability in full would create an economic hardship or

       would be unfair and inequitable.

You must also attach appropriate documentation that will support your request for an ETA offer such as proof of unusual expenses that would cause you economic hardship if the taxes were collected in full.

The information in this package is designed to assist you in determining

if an offer in compromise is the right payment option for you, as well as guide you through the process of completing a complete offer in compromise application package. Please read and follow the directions carefully!

Step Two:

What We Need to Fully Evaluate Your Offer

1. COMPLETE AN ACCURATE

FORM 656 - Complete all applicable items on Form 656, which is the official compromise agreement. You must sign Form 656. If someone other than yourself prepared the offer package, then please see the instructions in Step Four, Items 12 and 13, found on Page 11 of this package. If your Form 656 was prepared by an authorized Representative, you must include

a completed Form 2848, Power

of Attorney and Declaration of Representative, with your offer. Detailed instructions for the completion of Form 656 are

found on Pages 10 and 11 of

this package.

Common errors to avoid in completing Form 656:

. The taxpayer's name is missing.

. The street address is missing or

     incomplete.

. The social security number (SSN) or

    employer identification number (EIN)

    is missing, incomplete, or incorrect.

. The preprinted terms and conditions listed on the Form 656 have been

    altered or deleted.

. An offer amount or payment term

    is missing.

            . A required signature is missing.

2. COMPLETE AN ACCURATE COLLECTION INFORMATION STATEMENT (Form 433-A and/or Form 433-8) - You must provide financial information when you submit offers based on doubt as to collectibility and effective tax administration. We do not require this information if your offer is based solely on doubt as to liability. You must send us current information that reflects your

3

financial situation for the three months immediately prior to the date you submitted your offer in compromise. Collection information statements must show all of your assets and income, even those unavailable to

us through direct collection action, because you can possibly use them to fund your offer. The offer examiner needs this information to evaluate your offer and may ask you to update it or verify certain financial information. These forms must be filled in completely. We may return offer packages that are incomplete. Annotate items that do not apply to you with uN/A." Provide all the information required to support your financial condition. Required items of documentation are clearly indicated on the collection information statements with icons.

When only one spouse has a tax liability but both have incomes, only the spouse responsible for the tax debt is required to prepare the necessary collection information statements.

The responsible spouse should include only his/her assets and liabilities on his/her collection information statements. However, the income and expenses of the entire household is required on their collection information statements. The entire household includes spouse, domestic partner, significant other, children, and others that contribute to the household. This is necessary for the IRS to evaluate the income and expenses allocable to the liable taxpayer.

In States with community property laws, we require collection information statements from both spouses.

We may also require financial information on the non-liable spouse, or cohabitant(s), for offer verification purposes, even when community property laws do not apply.

Step Three: Determining the Amount of

                   Your Offer

Doubt as to Collectibility

Your offer amount must equal or

exceed your reasonable collection potential amount. The information

provided on the collection information statements (Form 433-A and Form 433-8) assists us in determining

the reasonable collection potential (RCP) of your tax liability. The

RCP equals the net equity of your assets plus the amount we could collect from your future income.

If our financial analysis indicates that you have the ability to fully pay the tax liability, either immediately or through an installment agreement, unless special circumstances are involved, your offer will not be accepted. You must offer an amount greater than or equal to

the RCP amount. All offer amounts must exceed zero, including doubt as to liability offers.

If special circumstances cause you to offer an amount less than the RCP, you must complete Item 9, "Explanation of Circumstances," on Form 656, explaining your situation. You must also attach to Form 656 any supporting documents to help support your special circumstances. Special circumstances may include factors such as advanced age, serious illness from which recovery is unlikely, or any other factors that impact upon

5

your ability to pay the total RCP and continue to provide for the necessary living expenses for you and your family.

If you are a wage earner or self-employed individual, completion of the worksheet on Pages 8 and 9 will give you a good estimate of what an acceptable offer amount may be. You will use the information on your Form 433-A to complete the worksheet.

Doubt as to Liability

Complete Item 9, "Explanation of

Circumstances," on Form 656, explaining why, in your judgment, you do not owe the tax liability you want to compromise. Offer the correct tax, penalty, and interest owed based on your judgment in Item 7 on Form 656.

Effective Tax Administration (ETA)

Complete Form 433-A or Form 433-8,

as appropriate, and attach to Form 656. You must complete Item 9, "Explanation of Circumstances," on Form 656, explaining your exceptional circumstances and why requiring payment of the tax liability in full would either create an economic hardship or would be unfair and inequitable. You must also

attach to Form 656 any documents

to help support your exceptional circumstances.

Deferred Payment Offer

This payment plan requires you to pay

the offer amount over the remaining statutory period for collecting the tax.

The offer must include the realizable value of your assets plus the amount we could collect through monthly payments during the remaining life of the collection statute.

. Using the worksheet on Pages 8 and 9,

multiply the amount from Item 12, Box 0, by the number of months remaining on the collection statute. Add that amount to Item 11, Box N, and use the total as the basis for your offer amount in Item 7 of Form 656.

You can pay the deferred payment plan in three ways:

Plan One

. Full payment of the realizable value of

your assets within 90 days from the date we accept your offer, and

. Your "future income" in monthly payments during the remaining life of the collection statute

Plan Two

. Cash payment for a portion of the

realizable value of your assets within 90 days from the date we accept your offer, and

. Monthly payments during the remaining life of the collection statute for both the balance of the realizable value and your future income

Plan Three

. The entire offer amount in monthly

payments over the life of the collection statute

7

                    --------­

For example, on a deferred payment offer with 7 years (84 months) remaining on the statutory period for collection and a total offer of $25,000, you might propose to pay your realizable value of assets (e.g., $10,000) within 90 days and your future income (e.g., $179

per month for 7 years, or $15,000)

in 84 monthly installments of $179. Alternately, you could also pay the same total $25,000 offer in 84 monthly installments of $298.

Just as with short-term deferred payment offers, we may file a Notice of Federal Tax Lien on tax liabilities compromised under Deferred Payment Offers.

Note: The worksheet on Pages 8

and 9 instructs wage earners and self-employed individuals how to figure the appropriate amount for a Cash, Short-Term Deferred Payment, or Deferred Payment Offer.

Offer in Compromise Worksheet

Please see Pages 8 and 9.

Funding Your Offer

If you do not have the cash to pay your

offer amount immediately, you should begin the process of exploring options to finance your offer amount. Options you may want to consider include liquidating assets, obtaining a loan from a lending institution, borrowing on your home equity through a second mortgage or reverse mortgage, or borrowing funds from family members or friends.

11. Add amounts in Boxes G through M to obtain your total equity and assets

12. Enter amount from Item 34

       Enter amount from Item 45 and subtract

$ -$

If Box 0 is 0" or less, STOP. Use the amount from Box N and to base your offer amount in Item 7 of Form 656. Your offer amount must equal or exceed (*) the amount shown in BoxN.

                                 Net Difference

          This amount would be available

to pay monthly on your tax liability.

13a.

If you will pay the offer amount

in 90 days or less (i.e., cash offer):

Enter amount from Box 0

Multiply by

Enter amount from Box N

Add amounts in Box P and BoxQ

$

13b.

If you will pay the offer amount in more than 90 days but less than 2 years (i.e.,short-term deferred payment offer):

Enter amount

from Box 0 $

Enter amount from Box N

Add amounts in Box Sand BoxT

Use the amount from Box U to base your offer amount in Item 7 of Form 656.

Note: Your offer amount must equal or exceed (*) the amount shown in Box U.

Use the amount from Box R to base your offer amount in Item 7 of Form 656.

Note: Your offer amount must equal or exceed (*) the amount shown in Box R.

Note: Do not compute your offer amount using 13a or 13b if your statute expiration date(s) is less than 5 years from the date of your offer. Instead, refer to page 7 under "Deferred Payment Offer" options 1 through 3.

* Unless you are submitting an offer under effective tax administration or doubt as to collectibility with special circumstances considerations, as described on page 5.

9

Item 6 (cant'd):

Effective Tax Administration offers require you to complete a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, if you are an individual

taxpayer, or a Form 433-8, Collection Information Statement for Businesses, if you are a corporation or other business taxpayer. Complete Item 9, "Explanation of Circumstances."

Item 7:

Enter the total amount of your offer (see Page 5, "Determining the Amount of Your Offer'J. Your offer amount cannot include a refund we owe you or amounts you have already paid.

Check the appropriate payment box (cash, short-term deferred payment or deferred payment - see Page 6, "Determine Your Payment Terms'? and describe your payment plan in the spaces provided.

Item 8:

It is important that you understand the requirements listed in this section. Pay particular attention to Items 8(d)

and 8(g), as they address the future compliance provision and refunds.

Item 9:

Explain your reason(s) for submitting your offer in the "Explanation of Circumstances." You may attach

additional sheets if necessary. Include your name and SSN or EIN on all attachments.

Item 10:

Explain where you will get the funds to pay the amount you are offering.

Item 11:

11 (a) and 11 (b) Signature of Taxpayer. All persons submitting the offer must sign and date Form 656. Include titles of

authorized corporate officers, executors, trustees, Powers of Attorney, etc., where applicable.

Item 12:

If someone other than the taxpayer prepared this Offer in Compromise, the

taxpayer should insert their name and address (if known) in Item 12.

Item 13:

Paid Preparer's Use Only. Self explanatory.

Please see the "Privacy Act Notice" on Page 13.

Item 14:

If you want to allow the I RS to discuss your Offer in Compromise with a friend, family member, or any other person, including an individual you paid to prepare this form, check the "Yes" box in Item 14, "Third Party Designee," on your Form 656. Also enter the designee's name and phone number. Checking the "Yes" box allows the I RS to contact another person and discuss with that person any additional information

the IRS needs to process your offer. This additional information may include information about tax liabilities you failed to list in Item 5 on your Form 656 or returns you have failed to file. If your contact person is an attorney, CPA, or enrolled agent and you wish to have them represent you regarding this offer, a Form 2848, Power of Attorney and Declaration of Representative, should be completed and submitted with your offer.

Note: Staple in the upper left corner the four (4) pages of Form 656 before you

              send it to us.

11

Step Five:

Offer in Compromise (OIC) Application Fee

What is an Offer in Compromise Application Fee?

When you submit an offer in compromise (OIC), the Internal Revenue Service expends resources evaluating your individual financial condition. The OIC

application fee allows the Internal Revenue Service to recover a portion of the cost of processing your OIC.

How much is the fee?

The application fee is $150 for each Form 656 submitted. Do not send cash. Please pay either by check or money order and make payable to the

"United States Treasury." (See Offer in Compromise (OIC) Application Fee Worksheet.)

When is the fee due?

The application fee of $150 is due at the time you submit your OIC for consideration.

Do all OICs require this fee?

You must remit the application fee along with your Form 656, Offer

in Compromise, unless:

(1) Your OIC is based solely on

doubt as to liability (see Page 1 of this Offer in Compromise package), or (2) You certify that your total monthly income is at or below levels based on the poverty guidelines established by the

U.S. Department of Health and Human Services. (See Offer in Compromise (OIC) Application Fee Worksheet.)

The exception for taxpayers with incomes below these levels only applies to individuals; it does not apply to other entities such as corporations

or partnerships.

How do I determine if I qualify for the exception?

To determine if you qualify for the exception, please complete the attached Offer in Compromise (OIC) Application Fee Worksheet.

Is the application fee ever refunded?

If the Internal Revenue Service accepts your OIC based on effective tax administration or special circumstances (see Pages 1 and 5, respectively, in this Offer in Compromise package), the fee will be applied against the amount of the offer, or refunded to you if you

request. In addition, if your offer is determined to be not processable as described on Page 2 of this Offer in Compromise package, then your $150 application fee will be returned to you along with your offer.

What happens if I do not submit the application fee with my OIC Form 656?

Except for the two situations described above under "Do all OICs require this fee?" any OIC submitted without the

fee will be returned to you without further consideration.

Where do I call if I have additional questions about

OICs and the application fee?

If you have additional questions about an OIC or about the application fee, please call toll free at 1-800-829-1040 or visit our website at www.irs.gov.

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Step Seven: What to Expect after the IRS Receives

                     Your Offer

How We Consider Your Offer

An offer examiner will evaluate your offer and may request additional documentation from you to verify financial or other information you provide. The examiner will then make a recommendation to accept or reject the offer. The examiner may also

return your offer if you don't provide the requested information.

The examiner may decide that a larger offer amount is necessary to justify acceptance. You will have the opportunity to amend your offer.

Additional Agreements

When you submit certain offers, we may also request that you sign an additional agreement requiring you to:

Withholding Collection Activities

There are certain circumstances where we will withhold collection activities while we consider your offer. We will not act to collect the tax liability:

. While we investigate and evaluate

your offer.

. For 30 days after we reject an offer. . While you appeal an offer rejection.

. However, a Notice of Federal Tax

Lien may be filed at any time while your offer is being considered.

. Pay a percentage of you r futu re eamings. . Waive certain present or future tax

benefits.

The above do not apply if we find any indication that you submitted your offer to delay collection or cause a delay which will jeopardize our ability to collect the tax.

If you currently have an installment agreement when you submit an offer, you must continue making the agreed upon monthly payments while we consider your offer.

If We Accept Your Offer

If we accept your offer, we will notify you by mail. When you receive your acceptance letter, you must:

. Promptly pay any unpaid amounts

that become due under the terms

of the offer agreement. You must comply with the payment terms specified in the agreement in a timely manner or your offer and agreement will be in default.

. Comply with all the terms and conditions of the offer, along with those of any additional agreement.

. Promptly notify us of any change of address until you meet the conditions of your offer. Your acceptance letter will indicate the IRS office to contact if your address changes. Your notification allows us to contact you immediately regarding the status of your offer.

We will release all Notices of Federal Tax Lien when you satisfy the payment terms of the offered amount. For an immediate

15

release of a lien, you can submit certified funds with a request letter to the address on the acceptance letter.

Once your offer is accepted, not filing returns or paying taxes when due could result in the default of an accepted offer (see Item B(d) of Form 656 for the future compliance provision). If you default your agreement, we will reinstate the unpaid amount of the original tax liability, file a Notice of Federal Tax Lien on any tax liability without a filed notice, and resume collection activities. The future compliance provision applies to offers based on doubt as to collectibility. In certain cases, the future compliance provision may apply to offers based on effective tax administration.

We will not default your offer agreement when you have filed a joint offer with your spouse or ex-spouse as long as you have kept or are keeping all the terms of the agreement, even if your spouse or ex-spouse violates the future compliance provision.

Step Eight:

Offer in Compromise (OIC) Summary Checklist

Below is a checklist of items that you should review and complete prior to submitting your Form 656, Offer in Compromise. This checklist is solely for your benefit, so do not submit with your offer.

0 Did you answer YES to any of the three questions on Page 2? If you did, then please do not submit Form 656 because you are not eligible to have your offer considered at this time.

0 Have you properly completed Form 656, Offer in Compromise, by following the instructions on Pages 10 and 11?

0 The preprinted terms and conditions listed on Form 656 have not changed.

0 Are you using the most current versions of Form 656, Form 433-A, and Form 433-B as instructed on Page 2.

0 You included your name (or names,

      if joint).

0 You included your social security number (SSN) or employer identification number (EIN) and it is accurate.

0 You included an offer amount

(the amount must be greater than zero) or payment term.

0 You signed the Form 656. If this is a joint Form 656, both spouses must sign Form 656.

0 You either attached the application fee in the designated area on the Form 656 or attached the Form 656-A certification, whichever is applicable. If you attached Form 656-A, then you must complete

the Offer in Compromise (OIC) Application Fee Worksheet.

0 If your offer is based on doubt

as to collectibility, you included complete financial information (Form 433-A or Form 433-8, or both) and all attachments.

0 You signed or initialed in all required places on Form 433-A and/or Form 433-B.

0 Your offer amount is greater than or equal to the reasonable collection potential (RCP) as described on Page 5 and calculated on Page 9.

0 If applicable, are Items 12 and 14,

      on Form 656 completed?

0 If applicable, is Item 13 on Form 656

      completed and signed?

0 Have you properly identified

      where to file your Form 656 from

      the instructions on Page 14?

If you have any questions, please call our toll.free number at 1-800-829-1040. You can get forms and publications by calling toll free at 1-800-829-3676 (1-800-TAX-FORM), or by visiting your local Internal Revenue Service (IRS) office or our website at www./rs.gov.

17

Item 9 - Explanation of Circumstances

I am requesting an offer in compromise for the reason(s) listed below:

Note: If you are requesting compromise based on doubt as to liability, explain why you don't believe you owe the tax.

If you believe you have special circumstances affecting your ability to fully pay the amount due, explain your situation. You may attach additional sheets if necessary. Please include your name and SSN or EIN on all additional sheets or supporting documentation.

Item 10 - Source of Funds

I/We shall obtain the funds to make this offer from the following source(s):

Item 11 - Mandatory Signature(s)

If I/We submit this offer on a substitute form, I/we affirm that this form is a verbatim duplicate of the official Form 656, and I/we agree to be bound by all the terms and conditions set forth in the official Form 656.

For Official Use Only

I accept the waiver of the statutory period of limitations on assessment for the Internal Revenue Service, as described in Item 8(e).

Under penalties of pe~ury, I declare that I have examined this offer, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and

complete.

Signature of Authorized Internal Revenue Service Official

Title

11(a) Signature ofTaxpayer

Date

Date

11 (b) Signature of Taxpayer

Date

Item 12 - If this application was prepared by someone other than the tapayer, please fill in that person's name and address below.

Name:

Address:

(if known)

Item 13 Paid Preparer's Use Only

Pre parer's ....

signature ,.

Date

Check if

self-employed 0

I

        EIN

Preparer's CAF no. or PTIN

Firm's name (or              ...

yours if self-employed), =,.

address, and ZIP code

Phone no. (

Item 14 Third Party Designee

Do you want to allow another person to discuss this offer with the IRS?

0 Yes. Complete the following.

0 No

Designee's name ~

Phone (

no. ~

Item 8 - By submitting this offer, I/we have read, understand and agree to the following conditions:

(a) I/We voluntarily submit all payments made

        on this offer.

(b) The I RS will apply payments made under the terms of this offer in the best interest of the government.

(c) If the IRS rejects or returns the offer or I/we withdraw the offer, the IRS will return any amount paid with the offer. However, I/we understand the application fee will be kept by the IRS. If I/we agree in writing, IRS will apply the amount paid with the offer to the amount owed. If I/we agree to apply the payment, the date the I RS received the offer remittance will be considered the date of payment. I/We understand that the IRS will not pay interest on any amount I/we submit with the offer.

(d) I/We will comply with all provisions of the Internal Revenue Code relating to filing my/our returns and paying my/our required taxes for 5 years or until the offered amount is paid in full, whichever is longer. In the case of a jointly submitted offer to compromise joint tax liabilities, I/we understand that default with respect to the compliance provisions described in this paragraph by one party to this agreement will not result in the default of the entire agreement. The default provisions described in Item 8(n) of this agreement will be applied only to the party failing to comply with

the requirements of this paragraph. This provision does not apply to offers based on Doubt as to Liability.

(e) I/We waive and agree to the suspension of any statutory periods of limitation (time limits provided for by law) for the IRS assessment or collection of the tax liability for the periods identified in Item 5. I/We understand that I/we have the right not to waive these statutory periods or to limit the waiver to a certain length or to certain issues. I/We understand, however, that the

IRS may not consider this offer if I/we refuse to waive the statutory periods for assessment or if we provide only a limited waiver. I/We understand that the statute of limitations for collection will be suspended during the period an offer is considered pending by the IRS (paragraph 8(m) defines pending). The amount of any Federal tax due for the periods described in Item 5 may be assessed at any time prior to the acceptance of this offer or within one year of the rejection of this offer.

(f) The IRS will keep all payments and credits made, received or applied to the total original tax liability before submission of this offer. The IRS may keep any proceeds from a levy

served prior to submission of the offer, but not received at the time the offer is submitted. If I/we have an installment

agreement prior to submitting the offer, I/we must continue to make the payments as agreed while this offer is pending. Installment agreement payments will not be applied against the amount offered.

(g) As additional consideration beyond the amount of my/our offer, the IRS will keep any refund, including interest, due to me/ us because of overpayment of any tax or other liability, for tax periods extending through the calendar year that the IRS accepts the offer. I/We may not designate an overpayment ordinarily subject to refund, to which the IRS is entitled, to be applied to estimated tax payments for the following year. This condition does not apply if the offer is based on Doubt as to Liability.

(h) I/We will return to the IRS any refund identified in (g) received after submission of this offer. This condition does not apply to offers based on Doubt as to Liability.

(i) The IRS cannot collect more than the full

       amount of the tax liability under this offer.

Item 9 - Explanation of Circumstances

I am requesting an offer in compromise for the reason(s) listed below:

Note: If you are requesting compromise based on doubt as to liability, explain why you don't believe you owe the tax.

If you believe you have special circumstances affecting your ability to fully pay the amount due, explain your situation. You may attach additional sheets if necessary. Please include your name and SSN or EIN on all additional sheets or supporting documentation.

Item 10 - Source of Funds

I/We shall obtain the funds to make this offer from the following source(s):

Item 11 - Mandatory Signature(s)

If I/We submit this offer on a substitute form, I/we affirm that this form is a verbatim duplicate of the official Form 656, and I/we agree to be bound by all the terms and conditions set forth in the official Form 656.

For Official Use Only

I accept the waiver ofthe statutory period of limitations on assessment for the Internal Revenue Service, as described in Item 8(e).

Under penalties of pe~ury, I declare that I have examined this offer, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and

complete.

Signature of Authorized Internal Revenue Service Official

Title

11(a) Signature ofTaxpayer

Date

Date

11 (b) Signature of Taxpayer

Date

Item 12 -If this application was prepared by someone other than the tapayer, please fill in that person's name and address below.

Name:

Address:

Item 13 Paid Preparer's Use Only

(if known)

Preparer's II.­signature'

Date

Check If

self-employed 0

I

        EIN

Pre parer's CAF no. or PTIN

Firm's name (or              II.­

yours If self-employed), ,

address, and ZIP code

Phone no. (

Item 14 Third Party Designee

Do you want to allow another person to discuss this offer with the IRS?

Designee's                                                                                             I Phone (

name        ~                                                            no.     ~

0 Yes. Complete the following.

0 No

U)

I/We understand that I/we remain

responsible for the full amount of the tax liability, unless and until the IRS accepts the offer in writing and I/we have met all

the terms and conditions of the offer. The IRS will not remove the original amount of the tax liability from its records untill/we

have met all the terms of the offer.

(k) I/We understand that the tax I/we offer to compromise is and will remain a tax liability until I/we meet all the terms

and conditions of this offer. If I/we

file bankruptcy before the terms and conditions of this offer are completed, any claim the IRS files in the bankruptcy proceedings will be a tax claim.

(I)

Once the IRS accepts the offer in writing, I/we have no right to contest, in court or otherwise, the amount of the tax liability.

(m) The offer is pending starting with the date an authorized IRS official signs this form. The offer remains pending until an authorized IRS official accepts, rejects, returns or acknowledges withdrawal of the offer in writing. If I/we appeal an IRS rejection decision on the offer, the IRS will continue to treat the offer as pending until the Appeals Office accepts or rejects the offer in writing. If I/we don't file a protest within 30 days of the date the IRS notifies me/us of the right to protest the decision, I/we waive the right to a hearing before the Appeals Office about the offer in compromise.

(n) If I/we fail to meet any of the terms and conditions of the offer and the offer defaults, then the IRS may:

. immediately file suit to collect the entire

   unpaid balance of the offer

. immediately file suit to collect an amount equal to the original amount of the tax liability as liquidating damages, minus any payment already received under the terms of this offer

. disregard the amount of the offer and apply all amounts already paid under the offer against the original amount of the tax liability

. file suit or levy to collect the original amount of the tax liability, without further notice of any kind.

The IRS will continue to add interest, as Section 6601 of the Internal Revenue Code requires, on the amount the IRS determines is due after default. The IRS will add interest from the date the offer is defaulted untill/we completely satisfy the amount owed.

(0) The IRS generally files a Notice of Federal Tax Lien to protect the Government's interest on deferred payment offers. Also, the IRS may file a Notice of Federal Tax Lien during the offer investigation. This tax lien will be released when the payment terms of the offer agreement have been satisfied.

(p) I/We understand that the IRS employees

may contact third parties in orderto respond to this request and I/we authorize the IRS to make such contacts. Further, by authorizing the Internal Revenue Service to contact

third parties, I/we understand that I will not receive notice, pursuant to section 7602{c) ofthe Internal Revenue Code, of third parties contacted in connection with this request.

(q) If doubt as to collectibility and/or effective tax administration are checked in Item 6 above,

I/we are offering to compromise all the tax liabilities assessed against me/us as of the date of this offer and under the taxpayer identification numbers listed in Items 2 and/or 3 above. I/We authorize the IRS to amend

Item 5, above, to include any assessed liabilities we failed to list on Form 656.

Offer in Compromise

fJ1IRS

Form 656

Department of the Treasury Internal Revenue Service

IRS RECEIVED DATE

www.irs.gov

Item 1 - Taxpayer's Name and Home or Business Street Address

Fonm 656 (Rev. 7-2004) Catalog Number 16728N

Name

Name

Attach Application Fee (check or money order) here.

Street Address

City

ZIP Code

Mailing Address (if different from above)

State

Street Address

DATE RETURNED

City

ZIP Code

State

Item 2 - Social Security Numbers (a) Primary

(b) Secondary

Item 3 - Employer Identification Number (included in offer)

Item 4 - Other Employer Identification Numbers (not included in offer)

Item 5 - To: Commissioner of Internal Revenue Service

I/We (includes all types of taxpayers) submit this offer to

compromise the tax liabilities plus any interest, penalties, additions to tax, and additional amounts required by law (tax liability) for the tax type and period marked below: (Please mark an "X" in the box for the correct description and fill-in the correct tax period(s), adding additional periods if needed).

0 1040/1120 Income Tax - Year(s)

0 941 Employer's Quarterly Federal Tax Return - Quarterly

    period(s)

0 940 Employer's Annual Federal Unemployment (FUTA) Tax

    Return - Year(s)

0 Trust Fund Recovery Penalty as a responsible person of

    (enter corporation name)

for failure to pay withholding and Federal Insurance Contributions Act Taxes (Social Security taxes), for period(s) ending

0 Other Federal Tax(es) [specify type(s) and period(s)]

Note: If you need more space, use another sheet entitled "Attachment to Form 656 Dated

Sign and date the attachment following the listing of the tax periods.

Item 6-I/We submitthis offer for the reason(s) checked below:

0 Doubt as to Liability - "I do not believe I owe this tax."

You must include a detailed explanation of the reason(s) why you believe you do not owe the tax in Item 9.

0 Doubt as to Collectibility - "I have insufficient assets and income to pay the full amount." You must include a complete Collection Information Statement, Form 433-A and/or Form 433-B.

0 Effective Tax Administration - "I owe this amount and have sufficient assets to pay the full amount, but due to my exceptional circumstances, requiring full payment would cause an economic hardship or would be unfair and inequitable." You must include a complete Collection Information Statement, Form 433-A and/or Form 433B and complete Item 9.

Item 7

I/We offer to pay $                                 (must be more than zero).

Complete item 1 ° to explain where you will obtain the funds to make this offer.

Check only one of the following:

0 Cash Offer (Offered amount will be paid in 90 days or less.)

Balance to be paid in: 010, 030, 060, or 090 days from written

notice of acceptance of the offer.

0 Short-Term Deferred Payment Offer (Offered amount paid in

MORE than 90 days but within 24 months from written notice

    of acceptance of the offer.)

$                               within                        days (not more than 90

- See Instructions Section, Determine Your Payment Terms) from written notice of acceptance of the offer; and/or

beginning in the               month after written notice of acceptance

of the offer $                               on the                        day of each

month for a total of                    months. (Cannot extend more than

24 months from written notice of acceptance of the offer.)

0 Deferred Payment Offer (Offered amount will be paid over

the remaining life of the collection statute.)

$                               within                         days (not more than

90 - See Instructions Section, Determine Your Payment Terms) from written notice of acceptance of the offer; and

beginning in the first month after written notice of acceptance of

the offer $                             on the                       day of each month

for a total of                       months.

U)

I/We understand that I/we remain

responsible for the full amount of the tax liability, unless and until the IRS accepts the offer in writing and I/we have met all

the terms and conditions of the offer. The IRS will not remove the original amount of the tax liability from its records untill/we

have met all the terms of the offer.

(k) l!We understand that the tax I/we offer to compromise is and will remain a tax liability untill/we meet all the terms

and conditions of this offer. If I/we

file bankruptcy before the terms and conditions of this offer are completed, any claim the IRS files in the bankruptcy proceedings will be a tax claim.

(I) Once the IRS accepts the offer in writing, I/we have no right to contest, in court or otherwise, the amount of the tax liability.

(m) The offer is pending starting with the date an authorized IRS official signs this form. The offer remains pending until an authorized IRS official accepts, rejects, returns or acknowledges withdrawal of the offer in writing. If I/we appeal an IRS rejection decision on the offer, the IRS will continue to treat the offer as pending until the Appeals Office accepts or rejects the offer in writing. If I/we don't file a protest within 30 days of the date the IRS notifies me/us of the right to protest the decision, I/we waive the right to a hearing before the Appeals Office about the offer in compromise.

(n) If I/we fail to meet any of the terms and conditions of the offer and the offer defaults, then the IRS may:

. immediately file suit to collect the entire

   unpaid balance of the offer

. immediately file suit to collect an amount equal to the original amount of the tax liability as liquidating damages, minus any payment already received under the terms of this offer

. disregard the amount of the offer and apply all amounts already paid under the offer against the original amount of the tax liability

. file suit or levy to collect the original amount of the tax liability, without further notice of any kind.

The IRS will continue to add interest, as Section 6601 of the Internal Revenue Code requires, on the amount the IRS determines is due after default. The IRS will add interest from the date the offer is defaulted untill/we completely satisfy the amount owed.

(0) The IRS generally files a Notice of Federal Tax Lien to protect the Government's interest on deferred payment offers. Also, the IRS may file a Notice of Federal Tax Lien during the offer investigation. This tax lien will be released when the payment terms of the offer agreement have been satisfied.

(p) I/We understand that the IRS employees

may contactthird parties in orderto respond to this request and I/we authorize the IRS to make such contacts. Further, by authorizing the Internal Revenue Service to contact

third parties, I/we understand that I will not receive notice, pursuant to section 7602{c) ofthe Internal Revenue Code, ofthird parties contacted in connection with this request.

(q) If doubt as to collectibility and/or effective tax administration are checked in Item 6 above,

I/we are offering to compromise all the tax liabilities assessed against me/us as of the date of this offer and under the taxpayer identification numbers listed in Items 2 and/or 3 above. I/We authorize the IRS to amend Item 5, above, to include any assessed liabilities we failed to list on Form 656.

Important Information Regarding the Offer in Compromise (OIC)

Statute of Limitations for Collection is Suspended - The statute of limitations for collection of a tax debt is suspended while an OIC is "pending," or being reviewed. The Offer in Compromise is pending starting with the date an authorized IRS employee determines the Form 656, Offer in Compromise, can be processed

and signs the Form 656. The OIC remains pending until an authorized IRS employee accepts, rejects, returns, or acknowledges withdrawal of the offer in writing. If a

taxpayer appeals an OIC that was rejected, the IRS will continue to treat the OIC as pending until the Appeals Office accepts or rejects the OIC in writing.

Taxpayers Must File and Pay Taxes ­In order to avoid defaulting an OIC once

it is accepted by the IRS, taxpayers must remain in compliance in the filing and payment of all required taxes for a period

of five years, or until the offered amount

is paid in full, whichever is longer.

Failure to comply with these conditions

will result in the default of the OIC and

the reinstatement of the tax liability.

Federal Tax Liens Are Not Released ­If there is a Notice of Federal Tax Lien on record priortothe OIC being submitted, the lien is not released until the terms of the offer in compromise are satisfied, or until the liability is paid, whichever comes first. The IRS generally files a Notice of Federal Tax Lien to protect the Government's interest on deferred payment offers.

This tax lien will be released when the payment terms of the offer agreement

have been satisfied.

Effect of the Offer on the Taxpayer's Refund - The IRS will keep any refund, including interest due to the taxpayer because of overpayment of any tax or other liability, for tax periods extending through the calendar year that the IRS accepts the offer. The taxpayer may not designate an overpayment ordinarily subject to refund, to which the IRS

is entitled, to be applied to estimated

tax payments for the following year.

This condition does not apply if the

offer is based on doubt as to liability.

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Effect of the Offer on Installment Agreements and Levies - The IRS will keep all payments and credits made, received or applied to the total original tax liability before submission of this offer. The IRS may keep any proceeds from a levy served prior to submission of the offer, but not received at the time the offer is submitted. The taxpayer understands that if they had an installment agreement prior to submitting the offer, he/she must continue to make the payments as agreed while this offer

is pending. Installment agreement payments will not be applied against

the amount offered.

Public Inspection Files for Accepted Offer in Compromise Files - The law requires IRS to make certain information from accepted Offers in Compromise available for public inspection and review. These public inspection files are located in your local IRS Territory Office. It is important to know that certain information regarding your accepted Offer in Compromise may be publicly known.

Taxpayer Advocate Services - If at anytime you feel that you need help in resolving a tax problem that has not been resolved through normal channels or you are experiencing significant hardship, then you may contact our Taxpayer Advocate Service (TAS). To find more information on T AS or to locate your local T AS office, call the nationwide T AS toll-free number 1-877-777-4778, or visit our website at www.irs.gov.

Low Income Taxpayer Clinic (LlTC) ­In addition, each taxpayer has a right to representation but not everyone can

afford representation. The Low Income Taxpayer Clinic (UTC) was developed to represent low income taxpayers before

the IRS for free or for a minimal charge.

You can learn about LlTC by going to

our website at www.irs.gov and click

on Taxpayer Advocate Services, or you

can call the nationwide T AS toll-free

number 1-877-777-4778.

Except for offers based on doubt

as to liability, the offer agreement requires you to forego certain refunds, and to return those refunds to us if they are issued to you by mistake. These conditions are also listed on Form 656, Items 8(g) and 8(h). For example,

if your offer was accepted by the IRS in the tax year 2004, the IRS would keep the refund due to you with respect to the tax year 2004, which you would normally receive in calendar year 2005 (because the due date for filing the tax year 2004 is Apri/15, 2005).

If We Reject Your Offer

We'll notify you by mail if we reject your offer. In our letter, we will explain our reason for the rejection. We will also keep your $150 application fee. If your offer is rejected, you have the right to:

. Appeal our decision to the Office of

Appeals within thirty days from the date of our letter. The letter will include detailed instructions on how to appeal the rejection.

. Submit another offer with another application fee. You must increase an offer we've rejected as being too low when your financial situation remains unchanged. However, you must provide updated financial information when your financial situation has changed or when the original offer is more than six months old.

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Step Six:

Where You Need to Send Your Offer

Where to File

IF YOU RESIDE IN

The states of Alaska, Alabama, Arizona, California, Colorado, Hawaii, Idaho, Kentucky,

Louisiana, Mississippi, Montana, Nevada, New Mexico, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin or Wyoming,

AND

AND

You are a wage earner, retiree, or a self-employed individual without employees,

You are OTHER than a wage earner, retiree, or a self-employed individual without employees,

THEN MAIL

THEN MAIL

Form 656 and attachments to:

Form 656 and attachments to:

Memphis Internal Revenue Service Center COIC Unit

PO Box 30803, AMC

Memphis, TN 38130-0803

Memphis Internal Revenue Service Center COIC Unit

PO Box 30804, AMC

Memphis, TN 38130-0804

IF YOU RESIDE IN

Arkansas, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, West Virginia or have a foreign address,

AND

AND

You are a wage earner, retiree, or a self-employed individual without employees,

You are OTHER than a wage earner, retiree, or a self-employed individual without employees,

THEN MAIL

THEN MAIL

Form 656 and attachments to:

Brookhaven Internal Revenue Service

Center COIC Unit

PO Box 9007

Holtsville, NY 11742-9007

Form 656 and attachments to:

Brookhaven Internal Revenue Service

Center COIC Unit

PO Box 9008

Holtsville, NY 11742-9008

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Privacy Act Notice

We ask for the information on this form to carry out the internal revenue laws of the United States. Our authority to request this information is section 7801. Our purpose for requesting the information is to determine if it is in the best interests of the IRS to accept an offer in compromise. You are not required to make an offer in compromise; however, if you choose to do so, you must provide all of the taxpayer information requested. Failure to provide all of the information may prevent us from processing your request. If you are a paid preparer and you prepared the Form 656 for the taxpayer submitting an offer, we request that you complete and sign Item 13 on Form 656, and provide identifying information. Providing this information

is voluntary. This information will be used to administer and enforce the internal revenue laws of the United States and may be used to regulate practice before the Internal Revenue Service for those persons subject

to Treasury Department Circular No. 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service. Information on this form may be disclosed to the Department of Justice for civil and criminal litigation. We may also disclose this information to cities, states, and the District of Columbia for use in administering their tax laws, and to Federal and state agencies to enforce nontax criminal laws and to combat terrorism. The authority to disclose information to combat terrorism expired on December 31, 2003. However, legislation is pending that would reinstate this authority. Providing false or fraudulent information on this form may subject you to criminal prosecution and penalties.

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Step Four:

Completing Form 656, Offer in Compromise

We have included two Offer in Compromise forms. Use one form to submit your Offer in Compromise. You may use the other form as a worksheet and retain it for your personal records.

Note: If you have any questions about completing this form, you may call toll free at

1-800-829-1040 or visit your local IRS office or our website at www.irs.gov. We may return your offer if you don't follow these instructions.

Item 1:

Enter your name and home or business street address. Show both names on a joint offer for joint liabilities. You also should include a mailing address if it is different from your street address.

If you owe a liability ­

Jointly with another person and both of

you agree to submit an offer, send only one Form 656, Offer in Compromise, and one $150 application fee (or Form 656-A, if applicable).

By yourself (such as employment taxes), and other liabilities with another

person (such as income taxes), but only you are submitting an offer, then list all tax liabilities on one Form 656

and submit one $150 application fee (or Form 656-A, if applicable).

By yourself and another one jointly, and both of you submit an offer, then you must show all tax liabilities on your Form 656 and submit one $150 application fee (or Form 656-A, if applicable).

The other person should show only the joint tax liability on their Form 656 and submit one $150 application fee (or Form 656-A, if applicable).

Item 2:

Enter the social security number(s) for the person(s) submitting the offer. For example, enter the social security number of both spouses when

submitting a joint offer for a joint tax liability. However, when only one spouse submits an offer, enter only that spouse's social security number.

Item 3:

Enter the employer identification number for offers from businesses.

Item 4:

own or in which you have an ownership interest.

Show the employer identification numbers for all other businesses

(excluding corporate entities) that you

Item 5:

Identify your tax liability and enter the tax year or period. Letters and notices from us and Notices of Federal Tax Lien show

the tax periods for trust fund recovery penalties.

Item 6:

Check the appropriate box(es) describing the basis for your offer.

Doubt as to Liability offers require a statement describing in detail why you think you do not owe the liability. Complete Item 9, "Explanation of Circumstances;' explaining your situation.

Doubt as to Collectibility offers require you to complete a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, if you are an individual taxpayer, or a Form 433-8, Collection Information Statement for Businesses, if you are a corporation or other business taxpayer.

Note: Attach to the upper left corner of Form 656 the six (6) pages of the collection

           information statement(s) and all related documents before you send it to us.

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Determine Your Payment Terms

There are three payment plans you and the IRS may agree to:

. Cash (paid in 90 days or less);

. Short-Term Deferred Payment

    (more than 90 days, up to 24 months);

            . Deferred Payment (offers with

    payment terms over the remaining

    statutory period for collecting the tax).

Cash Offer

You must pay cash offers within 90 days of a written notice of acceptance.

You should offer the realizable value

of your assets plus the total amount

we could collect over 48 months of payments (or the remainder of the ten-year statutory period for collection, whichever is less).

Note: We require full payment of

accepted doubt as to liability offers at the time of mutual agreement of the corrected liability. If you're unable to pay the corrected amount, you must also request compromise on the basis of doubt as to collectibility.

Short-Term Deferred Payment Offer

This payment plan requires you to pay the offer within two years of acceptance.

The offer must include the realizable value of your assets plus the amount we could collect over 60 months of payments (or the remainder of the ten-year statutory period for collection, whichever is less).

You can pay the short-term deferred payment plan in three ways:

6

Plan One

. Full payment of the realizable value

of your assets within 90 days from the date we accept your offer, and

. Payment within two years of acceptance of the amount we could collect over 60 months (future income) or the remaining life of the collection statute, whichever is less.

Plan Two

. Cash payment for a portion of the

realizable value of your assets within 90 days from the date we accept your offer, and

. The balance of the realizable value plus the amount we could collect over 60 months (future income) or the remaining life of the collection statute, whichever is less, within two years of acceptance.

Plan Three

. The entire offer amount in monthly

payments extending over a period not to exceed two years from date

of acceptance (e.g., four payments within 120 days of acceptance).

For example, on a short-term deferred payment total offer of $16,000, you might propose to pay your realizable value of assets (e.g., $13,000) within 90 days

of acceptance and the amount of your future income (e.g., $50 per month for 60 months, or $3,000) over 6 monthly payments of $500 each, beginning the first month after acceptance.

We may file a Notice of Federal Tax Lien on tax liabilities compromised under short-term payment offers.

3. RESPOND PROMPTLY TO REQUESTS FOR ADDITIONAL INFORMATION - While we are evaluating your offer, we may contact you for any information that is missing, or requires clarification. Respond promptly to any requests for additional information. If we do not receive this information from you in a timely manner, we will not give your offer any further consideration. It will be returned to you, and you will forfeit the $150 application fee.

4

4. ESTIMATED TAX PAYMENTS MUST BE UP TO DATE FOR THE CURRENT YEAR - We will not process your offer to completion if we determine that your estimated tax payments for the current year's income tax liability are not paid up to date. If we determine this to be the case, you will have one opportunity to make the required payments before we return your offer. If we return your offer because you did not make the estimated tax payments, then your $150 application fee will be forfeited.