What Form 433-A (OIC) Is For
Form 433-A (OIC) 2025 is the official IRS collection information statement used to evaluate a taxpayer’s ability to pay through the Offer in Compromise program. It requires complete financial disclosure, including income, household expenses, and personal assets such as bank accounts and retirement account statements. The IRS reviews this financial information to determine whether a taxpayer qualifies for tax relief through lump-sum or monthly payment options.
This tax form applies to wage earners, self-employed individuals, and small business owners who owe a remaining balance and seek a structured payment plan. Providing accurate employment information, household income, and personal asset details allows the IRS to assess reasonable payment options and decide if the offer aligns with the taxpayer’s financial hardship.
Learn how to complete your tax relief and collection forms correctly to avoid delays.
When You’d Use Form 433-A (OIC)
Taxpayers facing ongoing tax debt often use Form 433-A (OIC) to show their financial hardship and request relief through an Offer in Compromise. This IRS form helps determine if a taxpayer qualifies for a reduced settlement or structured payment plan based on current financial capacity. It applies to both wage earners and self-employed individuals seeking a manageable resolution to their tax obligations.
Eligibility and Purpose
The IRS evaluates the form to confirm whether you qualify for an Offer in Compromise or another payment plan. Accurate reporting of income, business expenses, and assets allows the IRS to assess your ability to pay.
Filing Conditions
You must complete Form 433-A (OIC) when you owe more than you can pay, require a partial payment installment agreement, or need to demonstrate compliance with filing and payment rules.
Key Rules or Details for 2025
Form 433-A (OIC) in 2025 follows specific IRS guidelines that determine whether an Offer in Compromise request is eligible for review. Each rule ensures that taxpayers provide transparent and verifiable financial information to the IRS before it evaluates their ability to pay.
- Application Fee and Initial Payment: Every submission requires a $205 application fee and a non-refundable initial payment unless the applicant qualifies for low-income certification.
- Financial Disclosure: Applicants must disclose all household income, bank accounts, retirement accounts, and business information, as well as any other personal assets and life insurance policies.
- Expense Standards: The IRS applies national and local living expense limits to control excessive claims.
- Five-Year Compliance: Once the IRS accepts an offer, the taxpayer must file and pay all taxes on time for five consecutive years.
Step-by-Step (High Level)
Completing Form 433-A (OIC) involves several structured steps that help the IRS evaluate your financial disclosure accurately. Each stage ensures your application meets current Offer in Compromise standards while reflecting your genuine financial hardship. Providing accurate data supports fair consideration for payment plans, monthly payments, or a lump-sum settlement.
- Step 1: Confirm Eligibility
Use the IRS Offer in Compromise Pre-Qualifier Tool to confirm whether the taxpayer qualifies under the Offer in Compromise program. Ensure that all required tax returns are filed and that estimated payments remain up to date. - Step 2: Gather Documentation
Compile proof of income, bank accounts, business expenses, retirement account statements, and other personal assets. Maintain all financial records in an organized format for an accurate IRS review. - Step 3: Complete the Form
Enter employment information, monthly income, living expenses, and sole proprietorship information accurately. Verify that all financial data clearly matches the supporting documentation provided. - Step 4: Submit Your Package
Attach all supporting documents, designate payments correctly, and send your complete application through the mail or your IRS online account for timely processing.
Common Mistakes and How to Avoid Them
Filing Form 433-A (OIC) demands accuracy and consistency. Errors often occur when taxpayers overlook financial information or fail to meet the requirements for an Offer in Compromise. Understanding these issues and applying corrective steps helps ensure your submission remains complete and compliant.
- Incomplete Financial Disclosure: Taxpayers must list all bank accounts, business information, and personal assets, including complete statements for all retirement accounts and documentation of household income.
- Inflated or Unallowable Expenses: Taxpayers should adhere to the IRS's national and local standards for living expenses to avoid rejection.
- Missed Estimated Payments: Taxpayers must make all required estimated payments before submitting the form to maintain eligibility.
- Missing Supporting Documents: Applicants should attach pay stubs, credit limits, life insurance policies, and other proof to support each financial claim.
What Happens After You File
Submitting Form 433-A (OIC) begins the IRS evaluation process. The agency reviews your financial disclosure, which includes your income, bank accounts, personal assets, and monthly living expenses. During this period, most collection activities pause, although interest and penalties continue to accrue on your remaining balance. The review may take several months, depending on case complexity and the completeness of your supporting documentation.
Your Offer in Compromise can be accepted, rejected, or returned if information is missing. If the IRS accepts your offer, you must remain compliant with filing and payment requirements for a period of five years. Rejected applications can be appealed through the IRS Independent Office of Appeals.
Frequently Asked Questions
What is the purpose of Form 433-A (OIC)?
Form 433-A (OIC) serves as the IRS collection information statement used to evaluate a taxpayer’s ability to pay. It gathers financial information such as income, living expenses, and personal asset information to determine whether a taxpayer qualifies for an Offer in Compromise or another payment plan. Wage earners and self-employed individuals must submit a complete financial disclosure to ensure accurate evaluation.
Can I qualify for tax relief if I am experiencing financial hardship?
Taxpayers facing significant financial hardship may qualify for an Offer in Compromise if they are unable to pay their tax debt fully. The IRS evaluates household income, monthly business expenses, and other personal assets when assessing eligibility. Supporting documentation, such as retirement account statements and bank statements, strengthens your case.
How does the IRS evaluate my Offer in Compromise application?
The IRS evaluates each Offer in Compromise by reviewing income, employment information, and monthly expenses against the total tax liability. A revenue officer may request supporting documents such as pay stubs, life insurance policy details, or business information. The evaluation process can take several months, depending on the complexity of your financial situation.
What happens if my offer is accepted or rejected?
If the IRS accepts your offer, you must remain compliant with tax filings and payments for a period of five years. Rejected offers can be appealed through the IRS Independent Office within the appeal period. Taxpayers with changing employment status or income can request reconsideration with updated financial disclosure.
Should I hire a tax professional or a tax attorney to help?
A qualified tax professional or tax attorney can help you complete IRS Form 433 accurately and avoid delays. They ensure your financial documentation, such as gross receipts and business expenses, meets IRS requirements. Professional guidance also helps clarify payment options, such as lump sums, low monthly payments, or installment agreements under the compromise program.
