What Form 433-B (OIC) Is For
Form 433-B (OIC) 2025 is the Collection Information Statement for Businesses that request tax relief through an Offer in Compromise. The Internal Revenue Service uses this form to evaluate the business’s financial situation, including business bank accounts, business income, and business assets. This process ensures the IRS can determine whether a business qualifies to settle its outstanding tax debt for less than its full tax liability.
Corporations, partnerships, and limited liability companies submit this form to provide complete financial information that reflects fair market value. The data helps the IRS confirm eligibility for an appropriate payment plan or settlement agreement.
The IRS offers several tax relief and collection forms you can submit depending on your situation.
When You’d Use Form 433-B (OIC)
Form 433-B (OIC) applies when a business cannot meet its full tax liability and seeks an Offer in Compromise through the Internal Revenue Service. This step enables the IRS to assess the business’s financial situation and determine whether a reduced settlement is warranted. The form provides evidence of financial hardship through verified business income, business bank accounts, and business assets.
Eligibility and Timing
Businesses typically file this form after receiving a tax bill or when their federal tax deposits and payroll tax deposits are up to date. All income taxes and employment tax returns must be filed, and the business cannot be involved in bankruptcy or active litigation.
Key Rules or Details for 2025
Form 433-B (OIC) for 2025 requires complete accuracy and disclosure to help the Internal Revenue Service evaluate your business’s financial situation. The following rules outline the correct procedure for completing and submitting the form to ensure compliance and eligibility for an Offer in Compromise.
- Six-Month Documentation Rule: You must submit financial statements, profit and loss statements, and bank statements covering the latest six to twelve months.
- Asset Valuation: When reporting business assets, including accounts receivable and income-producing assets, use the fair market value as the basis for reporting these assets.
- Disallowed Expenses: You must exclude depreciation, entertainment, and other non-cash business expenses from your calculations.
- Transparency Requirement: You must clearly disclose all business bank accounts, business income, and federal tax deposits in your report.
Step-by-Step: How to Complete Form 433-B (OIC)
Completing Form 433-B (OIC) requires careful organization of financial information so the Internal Revenue Service can accurately assess your business’s financial position and eligibility for an Offer in Compromise. Each stage helps document your business’s income, assets, and tax liability.
- Step 1: You must gather bank statements, profit and loss statements, and other financial documents covering six to twelve months to establish your business’s economic stability and ability to pay.
- Step 2: Complete the business information section with your Employer Identification Number, ownership details, and business structure to ensure accurate identification.
- Step 3: You must report business bank accounts, business income, and business assets at fair market value and verify payroll tax deposits for accuracy.
- Step 4: You must review every entry for accuracy, sign the form, and attach it to Form 656 before submitting it to the IRS.
Common Mistakes and How to Avoid Them
Completing Form 433-B (OIC) demands accurate and verifiable financial information to help the Internal Revenue Service evaluate a business’s eligibility for tax relief. Many errors occur when applicants fail to organize their financial records or misunderstand IRS requirements for reporting business income, business assets, and tax deposits. Careful preparation can prevent rejections and costly delays.
Frequent Errors and How to Prevent Them:
- Incomplete Financial Records: You must gather six to twelve months of bank statements and profit and loss statements before filing.
- Undervalued Business Assets: You should use fair market value for all property, vehicles, and equipment when reporting.
- Inconsistent Tax Deposits: You must ensure that all payroll tax deposits and federal tax deposits remain up to date.
- Unverified Balances: You must reconcile all accounts receivable and business expenses before submission.
- Lack of Expert Review: You should seek professional assistance from a tax attorney or accountant for proper guidance.
What Happens After You File
Form 433-B (OIC) applies when a business cannot meet its full tax liability and seeks an Offer in Compromise through the Internal Revenue Service. This step enables the IRS to assess the business’s financial situation and determine whether a reduced settlement is warranted. The form provides evidence of financial hardship through verified business income, business bank accounts, and business assets.
Initial Review and Processing
The IRS checks that all required forms, financial statements, and federal tax deposits are included. Missing documents or inaccurate data can delay the evaluation or result in automatic rejection.
Investigation and Decision
An offer examiner assesses your outstanding tax debt, verifies income and business expenses, and decides whether to accept or counter your proposal.
Frequently Asked Questions
What is Form 433-B (OIC) used for?
Form 433-B (OIC) is the Collection Information Statement for Businesses required when requesting an Offer in Compromise from the Internal Revenue Service. It helps the IRS evaluate a business’s financial information, including business income, business assets, and tax liability, to determine eligibility for tax relief.
When should a business owner file Form 433-B (OIC)?
A business owner files Form 433-B (OIC) after receiving a tax bill or when facing outstanding tax debt. Filing occurs once all federal tax deposits, payroll tax deposits, and income taxes are up to date, ensuring compliance with IRS eligibility criteria.
What financial records should accompany Form 433-B (OIC)?
Include bank statements, profit and loss statements, and financial statements that reflect fair market value for the business’s assets. Accurate reporting helps the IRS evaluate the business’s ability to settle taxes through a payment plan or lump sum payment option.
Can self-employed individuals or wage earners use Form 433-B (OIC)?
No, self-employed individuals and wage earners use Form 433-A (OIC) instead to report personal financial information. Form 433-B (OIC) is reserved for corporations, partnerships, and LLCs managing business taxes and outstanding tax liability.
Should a business consult a tax professional before filing Form 433-B (OIC)?
Yes, a tax professional or tax attorney can help ensure accurate reporting of business bank accounts, accounts receivable, and business expenses. Professional assistance improves compliance with IRS expectations and increases the likelihood that the IRS accepts your offer under effective tax administration.
