What the Form Is For

Form 433-A (OIC) is a detailed financial statement required when you apply for an Offer in Compromise (OIC) with the IRS. Think of it as a complete financial snapshot that shows the IRS your ability—or inability—to pay your tax debt. An Offer in Compromise allows you to settle your tax debt for less than you owe, but only if the IRS determines you truly cannot pay the full amount through regular payment plans or by liquidating assets. IRS.gov

This form collects information about your income, expenses, assets, debts, and household situation. It's specifically designed for individual taxpayers who are wage earners, self-employed individuals, sole proprietors, or those personally responsible for certain tax penalties. The IRS uses this information to calculate the minimum offer amount they'll accept—essentially determining what you can realistically pay based on your financial situation. IRS.gov

When You'd Use It (Late/Amended)

You use Form 433-A (OIC) when you're applying for an Offer in Compromise—not for routine tax filing. This form is only submitted with Form 656 (Offer in Compromise) as part of a complete OIC application package. You should consider this option when you cannot pay your full tax liability through an installment agreement or lump-sum payment without creating severe financial hardship. IRS.gov

Prerequisites Before Submission

Before you can submit this form, you must:

• Have filed all required tax returns
• Have received a bill for at least one tax debt you want to compromise
• Be current on all estimated tax payments for the current year
• Not be in an open bankruptcy proceeding
• Have resolved any open audits or innocent spouse claims
  IRS.gov

Amending or Updating the Form

You cannot amend this form after submission in the traditional sense. However, if the IRS requests additional information or clarification during their review (which can take up to 24 months), you'll need to respond promptly with updated documentation. If your financial situation changes significantly during the evaluation period, you should inform the IRS immediately.
IRS.gov

Key Rules

Several critical rules govern Form 433-A (OIC):

Application Fees and Payments

You must include a $205 application fee and an initial payment with your offer. For lump-sum offers, the initial payment is 20% of your total offer amount. For periodic payment offers, you submit your first monthly payment.
Exception: If you meet low-income certification guidelines (based on your adjusted gross income and family size), you pay nothing upfront.
IRS.gov

Complete Financial Disclosure

You must report all household income and assets—including those of your spouse and others who contribute to household expenses—even if they're not liable for the tax debt. This includes domestic and foreign accounts, digital assets like cryptocurrency, retirement accounts, real property, vehicles, and valuable personal items. Incomplete or inaccurate information will result in your offer being returned without appeal rights.
IRS.gov

National and Local Standards

The IRS uses standardized amounts for necessary living expenses like food, clothing, housing, and transportation. You're allowed these standard amounts (or your actual expenses, whichever is less for local standards) without justification. However, expenses like private school tuition, college costs, and charitable contributions typically aren't allowed.
IRS.gov

Five-Year Compliance Period

If your offer is accepted, you must file all required tax returns and pay all taxes on time for five years after acceptance. One failure during this period defaults your offer, reinstating the original debt (minus payments made) with all interest and penalties.
IRS.gov

Step-by-Step (High Level)

Step 1: Determine Eligibility

Use the IRS Offer in Compromise Pre-Qualifier tool at IRS.gov/OICtool to see if you qualify and estimate your minimum offer amount. Ensure you've filed all required returns and made estimated payments.

Step 2: Gather Financial Documentation

Collect recent statements for all bank accounts, investment accounts, retirement accounts, mortgages, vehicle loans, credit cards, and pay stubs. You'll need proof of income, monthly expenses, and asset values. Include information about your entire household's finances.
IRS.gov

Step 3: Complete Form 433-A (OIC)

Fill out all eight sections thoroughly: personal information, employment details, personal assets (with current market values minus loans), monthly household income, monthly expenses, and your minimum offer calculation. If you're self-employed, complete additional sections on business assets, income, and expenses.
IRS.gov

Step 4: Calculate Your Offer Amount

The form guides you through calculating your minimum offer based on available equity in assets plus future remaining income. The multiplier depends on your payment plan: 12 months for lump-sum offers (paid within 5 months) or 24 months for periodic payment offers (paid over 6–24 months).
IRS.gov

Step 5: Assemble the Complete Package

Attach all required documentation listed at the end of the form. Complete Form 656 with your offer amount and payment terms. Include your application fee and initial payment (unless you qualify for low-income certification).
IRS.gov

Step 6: Submit and Respond

Mail your package to the appropriate IRS address (listed in Form 656-B) or submit online through your Individual Online Account. Respond promptly to any IRS requests for additional information—failure to respond within the specified timeframe results in automatic return of your offer.
IRS.gov

Common Mistakes and How to Avoid Them

Incomplete Asset Disclosure

Many taxpayers forget to report foreign accounts, digital assets, or assets held in others' names. The IRS has access to financial databases and will discover unreported assets, causing automatic rejection.
Solution: Report everything—bank accounts, cryptocurrency, retirement accounts, life insurance cash values, and safe deposit boxes, regardless of location.
IRS.gov

Inflating Expenses

Claiming non-allowable expenses like college tuition, timeshares, or credit card payments on luxury items will red-flag your application.
Solution: Review the National and Local Standards at IRS.gov/Collection-Financial-Standards and only claim expenses that align with these standards or are specifically allowable (like court-ordered support payments).

Offering Too Little

The IRS calculates a minimum acceptable offer amount using a formula. Offering significantly less without special circumstances guarantees rejection.
Solution: Use the calculation worksheets in the form carefully, or use the Pre-Qualifier tool for guidance. Your offer must equal or exceed the calculated minimum.
IRS.gov

Missing Required Payments

For periodic payment offers, you must continue making monthly payments while the IRS evaluates your offer. Missing even one payment results in automatic return without appeal rights.
Solution: Set up automatic payments and calendar reminders to ensure compliance throughout the 6–24 month review period.
IRS.gov

Falling Out of Compliance

Submitting the offer while owing current-year taxes or unfiled returns is the most common mistake.
Solution: Before submitting, verify you're current on all filings, estimated payments, and employment tax deposits for the past two quarters.
IRS.gov

What Happens After You File

After submission, you'll receive an acknowledgment letter with an estimated contact date (the review process can take up to 24 months). The IRS will assign your case to an offer examiner who will verify all information you provided. They may request additional documentation—bank statements, pay stubs, profit and loss statements, or property appraisals. You must respond within the timeframe specified or your offer will be returned.
IRS.gov

During the Review Period

While your offer is under review, collection activities are generally suspended—the IRS won't levy your wages or bank accounts. However, the IRS may file a Notice of Federal Tax Lien, and interest and penalties continue accumulating on your original debt. Your tax refunds will be applied to your debt, not to your offer amount. If you have an existing installment agreement, payments are suspended during the review.
IRS.gov

If Your Offer Is Accepted

You must pay the offer amount according to your chosen terms (5 months for lump-sum, 6–24 months for periodic). The five-year compliance period begins immediately—file and pay all taxes on time or your offer defaults. Federal tax liens remain until you complete all payments.
IRS.gov

If Your Offer Is Rejected

You have 30 days to appeal using Form 13711. The appeal goes to the IRS Independent Office of Appeals for review. If you don't appeal or your appeal is denied, your original debt (minus any payments made) remains due with all interest and penalties. Your application fee is not refunded, but any installment agreement is reinstated.
IRS.gov

If Your Offer Is Returned

If returned (not processed), the IRS sends back your application fee but applies initial payments to your debt. Common reasons include unfiled returns, open bankruptcy, or non-compliance after submission. You may request reconsideration within 30 days by providing evidence the return was in error.
IRS.gov

FAQs

Q: Can I negotiate with the IRS or is the calculated offer amount final?

The calculated amount is your minimum—you can offer more but rarely less. However, if you have special circumstances (serious illness, disability, or factors affecting your ability to earn income), the IRS may consider a lower amount. You can discuss these factors with the assigned examiner or request Fast Track Mediation for specific disputes.
IRS.gov

Q: What if I'm married but my spouse doesn't owe the taxes?

You must still include your spouse's income and shared household expenses on Form 433-A (OIC). The IRS uses this to determine your household's total financial capacity and your share of income/expenses. Your spouse doesn't need to sign the offer unless they're co-liable for the tax debt.
IRS.gov

Q: Do I qualify for low-income certification?

You qualify if your adjusted gross income (from your most recent Form 1040) is at or below the amounts shown in the chart on Form 656, based on family size and location. For 2025, this is generally around 250% of the federal poverty guidelines. If you qualify, you don't pay the application fee or any payments until your offer is accepted.
IRS.gov

Q: Can I use my tax refund to pay the offer amount?

No. The IRS keeps any refunds from tax years assessed before your offer acceptance—these are applied to your original debt, not your offer amount. You also cannot use expected refunds, money already paid to the IRS, or funds from ongoing IRS levies to fund your offer.
IRS.gov

Q: What happens if I lose my job or my financial situation worsens during the review?

Contact the assigned examiner immediately. Changed circumstances may support a lower offer amount, but you'll need to provide updated financial documentation. If you're in a periodic payment plan and can't make payments, the IRS may return your offer—communicate proactively to explore options.
IRS.gov

Q: Should I hire a tax professional to help with Form 433-A (OIC)?

While not required, offers in compromise have a high rejection rate (the IRS accepts only a fraction of applications). Tax professionals experienced in OIC applications understand which expenses are allowable, how to present special circumstances, and how to avoid common mistakes. The IRS warns against promoters who guarantee acceptance—research any professional's qualifications carefully.
IRS.gov

Q: How long does the entire process take?

From submission to final decision typically takes 6–24 months, depending on case complexity and IRS inventory levels. Incomplete applications, slow responses to information requests, or appeals extend this timeframe. During this period, you must maintain tax compliance and continue periodic payments if applicable.
IRS.gov