Your Guide to IRS Form 433-A (OIC)

When you’re not able to pay your tax bill because of your financial situation, you may qualify for an offer in compromise (OIC). This option allows you to settle your debt for less with the IRS — but only if the agency believes your offer is all they can reasonably expect to collect from you. 

You’ll usually fill out IRS Form 433-A (OIC) when requesting an OIC. This form discloses your finances and shows the IRS why you can’t pay your full balance. This form is an important piece of getting an OIC approved. Other IRS tax relief forms, such as the standard Form 433-A, provide similar information, but 433-A (OIC) is specific to OIC requests.

This guide walks through when you need Form 433-A (OIC), what it’s used for, how to complete the form, and when to seek professional help. Talk through your situation with the W Tax Group legal team to get expert guidance on tax law and IRS forms.

Key Takeaways:

• Form 433-A (OIC) – file when requesting an offer in compromise from the IRS, which allows you to settle your debt for less.
• How to complete – This form collects your financial information, including income, expenses, assets, and liabilities, along with an offer based on your situation. 
• Other requirements – You must be up to date on your tax filings and not in an open bankruptcy proceeding to qualify.
• Supporting documents – Attach the necessary documents to this form to support your claims, including pay stubs, bank statements, explanations, and court orders.
• Rules for businesses – Businesses applying for an OIC will use Form 433-B (OIC).

When Should I Use IRS Form 433-A (OIC)?

Form 433-A (OIC) is the Collection Information Statement for Wage Earners and Self-Employed Individuals that is usually required with offer in compromise requests. You’ll usually send this form alongside your Form 656, Offer in Compromise, which outlines your offer. 

Form 433-A (OIC) is for individuals who:

• Owe income tax on Form 1040
• Have excise tax personal liability
• Have been found responsible for a trust fund recovery penalty
• Have self-employment income
• Are responsible for a partnership liability
• Are submitting an OIC request for a deceased individual 

The details you provide on a Form 433-A should show the IRS that you are not able to pay. The form includes a breakdown of your finances, including income, expenses, assets, and liabilities, and your offer based on this information. You should submit any documents that support your claims. 

When Should I Apply for an OIC?

An offer in compromise may be the right option if you’re having trouble managing your tax debt, and it’s impossible for you to pay in full — even with a monthly payment plan in place. You may also request an OIC if making your full payment would cause significant financial hardship for you. 

Here are the IRS’s eligibility requirements:

• You are up to date with filing your tax returns and quarterly estimated tax payments.
• You are not involved in an open bankruptcy proceeding.
• You have an extension on your tax return for the current year.
• If you are an employer, you are current on the last two quarters of required tax deposits.

If you are requesting an OIC for a business, use Form 433-B (OIC) instead of Form 433-A (OIC). Ask a tax professional if you’re not sure if an OIC is right for you or if you have questions about how to complete Form 433-A (OIC).

How to Complete Form 433-A (OIC)

After determining whether an OIC is the best option for you, you need to carefully assemble your documents. These must be accurate and complete and provide a clear picture of your financial situation to the IRS. Follow these steps to complete Form 433-A (OIC) properly:

Section 1: Personal and Household Information

Here, you provide your personal details and information about your household, including your marital status, number of dependents, whether you rent or own, and address. If you’re married, you will provide your spouse’s personal details as well, including their Social Security number.

Section 2: Employment Information for Wage Earners

If you or your spouse have regular employment income with a W-2, here is where you will report that income and information about your job and your employer, including name, address, and pay period.

Section 3: Personal Asset Information

This section requires you to report your current assets, which include:

• Cash and investments, both domestic and foreign accounts
• Real property (home or timeshare)
• Vehicles (cars, boats)
• Other valuables (artwork, collectibles, jewelry)

You’ll need to provide all the details about each of these assets and the market value of each.

Section 4: Self-Employed Information

Complete this section only if you or your spouse is self-employed. You’ll need to provide information about your business, including a description, number of employees if applicable, and contact information.

Section 5: Business Asset Information

If you have a business, complete this section with information about all business assets, including accounts, digital assets, notes receivable, and accounts receivable.

Section 6: Business Income and Expense Information

Again, this section is for self-employed taxpayers to collect business financial information. You will provide a detailed list of all business income — including gross receipts, rental income, interest, and dividends — and business expenses — including materials, inventory, salaries, rent, supplies, utilities, vehicles, and other costs.

Section 7: Monthly Household Income and Expense Information

Here, you enter your household’s average gross monthly income. List gross wages plus Social Security, pension, and other income to get the total primary taxpayer income, and do the same for your spouse, if applicable. List other sources of income, such as interest, rental income, child support, and alimony.

Under the expense section, you’ll enter all your average monthly expenses, which include line items like:

• Food and clothing
• Housing
• Utilities
• Vehicles
• Transportation
• Insurance
• Healthcare
• Debts

Section 8: Calculate Your Minimum Offer Amount

This important section is where you calculate the offer you’re sending the IRS. The IRS will use this section, alongside your financials, to determine whether your offer is reasonable for what they can expect to collect from you. Follow the instructions for each formula to enter the numbers from previous sections you filled out, and you’ll get your final offer amount.

Section 9: Other Information

Here, you’ll provide other information the IRS needs to consider your request. You need to list details about litigation you’re involved in, bankruptcy filings within the last seven years, whether you’ve lived abroad in the last 10 years, and information about trusts or estates you’re a beneficiary to. 

Section 10: Signatures

You and your spouse (if applicable) will then sign and date the form under Section 10. This section also includes a complete checklist of attachments to include with your application.

Review Your Numbers Carefully

Before you finalize IRS Form 433-A (OIC), make sure you carefully review each number and claim on the form. You don’t want to send any inaccurate information to the IRS, as this will only create additional problems for you. Go over everything with a tax professional before you send it in to be sure it is done properly and accurately.

Assemble Your OIC Packet

Form 433-A (OIC) includes a checklist on the last page for all documents and statements you need to attach to the form, which are as follows:

• Pay stubs or employer earning statements
• Investment or retirement account most recent statement
• Statements from other income sources — pensions, Social Security, rental, etc.
• Bank account statements for the last three months (six most recent statements for businesses)
• Form 433-B if a business
• Lender statements for debts, including mortgages and vehicles
• Accounts receivable or notes receivable
• Delinquent state or local tax liability verification documents
• Court orders for child support or alimony
• Trust documents
• Explanations for special circumstances
• Form 2848, Power of Attorney and Declaration of Representative, if applicable.
• Form 656, completed and signed

Note that many of these documents can be copies, so you don’t have to send the originals. These attachments support the claims you make on your form about your income, expenses, assets, and liabilities, so you need to be sure everything aligns. If there are discrepancies, it will only delay your request further.

Different Versions of IRS Form 433

The IRS uses information statements for a variety of purposes outside of OIC applications. Here’s a brief overview of each version of Form 433 and when to use them:

• Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals: You may need to fill out this version when showing the IRS that you are experiencing financial hardship and are requesting currently not collectible (CNC) status.
• Form 433-A (OIC): A version of Form 433-A that is specific to OIC requests.
• Form 433-B, Collection Information Statement for Businesses: This version is specifically for businesses, not individuals, but essentially gathers the same financial information.
• Form 433-B (OIC): A version of Form 433-B that is specific to OIC requests from businesses.
• Form 433-D, Installment Agreement: Using this form, you agree to the outlined terms of a payment plan, including how much your monthly payment will be. You will also provide account information to set up direct debit for payments.
• Form 433-F, Collection Information Statement: You may use this form when the IRS is figuring out whether you qualify for a payment plan to pay off your tax debt.

If you’re not sure which form to use, or you’re having trouble completing a form the IRS requested from you, talk to a tax expert for guidance. The W Tax Group team is here to help you along the way.

What Happens After I Submit Form 433-A (OIC)?

The IRS review process can take months, especially when the IRS is backed up. The IRS will review your offer to determine whether it is reasonable based on your financials. Three outcomes are possible at this point:

• The IRS needs more information and will reach out to you to provide missing details. This can delay the process.
• The IRS accepts your offer, meaning your debt is reduced. You will receive documentation about the final payment terms via an acceptance letter, along with when to send your offer payments.
• The IRS rejects your offer. You still have options if this happens, including initiating an appeal of this decision. You may also qualify for other tax relief options such as:
  • Installment agreement
  • CNC status
  • Spousal relief
  • Penalty abatement

If your offer is denied, talk to a tax expert right away. You still have avenues you can take to get your debt paid off, even if your OIC is rejected.

Note that if you already have a payment plan in place, you don’t have to continue making payments while your OIC request is being processed. However, if the IRS doesn’t accept your offer, you’ll have to resume making installment agreement payments.

How W Tax Group Supports Taxpayers with IRS Forms 

When you’re considering an offer in compromise to settle your tax debt for less, understanding how to use Form 433-A (OIC) is essential. This form outlines your financial information to ensure the IRS understands why you can’t afford to pay your tax bill. All details on this form need to be accurate, up-to-date, and thorough.

W Tax Group is here to support you as you complete your OIC application. We’ll ensure an OIC is the right option for you, review your financial situation, and assist you in completing and sending Form 656 and Form 433-A (OIC). 

Contact W Tax Group to get started with a tax attorney.

Author: Lead Tax Attorney at The W Tax Group

Stephen A Weisberg