Form 433-A (OIC): 2025 Guide to Requirements and Docs

I remember the first time I sat with a taxpayer who was sure the IRS would never accept their offer. Their paperwork was scattered, expenses were not documented, and assets were listed in guesses, not facts. Once we slowed down, matched every number to proof, and aligned costs with the IRS Collection Financial Standards, their offer became clear and defensible. You can do the same. This guide shows you exactly how to complete Form 433-A (OIC), what to attach, and how the IRS checks your math so you avoid delays and rework.

Your goal is simple, submit a package the IRS can verify quickly, with numbers that match your documents and the IRS standards.

You will use Form 433-A (OIC) to support Form 656, Offer in Compromise. As of 2025, you can check eligibility, make payments, and even file your offer in your IRS Online Account, which can save weeks of back and forth. The core rules have not changed, you must be compliant, current on filings and required estimates, and not in bankruptcy when you apply. Fees, payment options, and low‑income certification still apply.

Key takeaways

• Form 433-A (OIC) is the financial statement the IRS uses to judge your offer amount. It must match Form 656 and your proof.
• Eligibility basics, all required returns filed, required estimated or payroll tax deposits are current, and no open bankruptcy case.
• The IRS applies national and local expense standards, updated April 21, 2025, to decide what monthly costs count. You may claim higher actuals with strong documentation.
• Asset equity often uses quick sale value, the IRS defines QSV as a fast sale price within about 90 days, and many practitioners estimate it near 80 percent of fair market value, subject to facts.
• Expect a nonrefundable application fee of $205 and an initial payment unless you meet low income certification. You may file online through your IRS account.

What is Form 433-A (OIC)?

Form 433-A (OIC) is the IRS Collection Information Statement for individuals who want to settle a tax debt for less than the full amount. It captures your personal details, income, allowable expenses, and your assets and debts, including bank accounts, vehicles, real estate, investments, and retirement accounts. If you are self‑employed, it also includes business revenue, expenses, inventory, and receivables. The IRS uses this to calculate your reasonable collection potential, compare it to your offer, and decide whether acceptance is in the government’s best interest.

You must attach proof for every figure. Think recent pay stubs, three months of bank statements, investment and retirement statements, loan payoff letters, and a current profit and loss if you run a business. Missing proof is the fastest path to a request for more information or a returned package.

Why the IRS cares about “reasonable collection potential”

By policy, the IRS usually requires an offer amount at least equal to your reasonable collection potential, a math blend of net realizable equity in assets and disposable income over a set period. Appeals and Collection value assets at net realizable equity, typically quick sale value minus any senior liens. The IRS defines QSV as a pressured sale price achieved within roughly 90 days, and it is generally lower than fair market value.

New for 2025, online help that trims friction

The IRS now lets many individuals check eligibility, submit, and pay through their Online Account. If you qualify for the low income certification, you skip the $205 fee and the initial payment while the IRS reviews your offer. This is a real time saver if you organize your documents first.

How this guide helps you file with confidence

• You will see exactly who should use Form 433-A (OIC) and when to wait.
• You will get a precise document checklist, what to gather, and how current it needs to be.
• You will walk through each section of the form in plain English, with tips that match how IRS reviewers work.
• You will learn how the 2025 Collection Financial Standards affect your allowed expenses.
• You will see alternatives if the numbers show your offer will not fly, including PPIA and CNC, so you do not waste time.

A quick note on help. If you want hands-on support collecting workpapers, naming files consistently, and building a clean review pack, a disciplined operations partner like Accountably can help your CPA stay in strategy while production stays organized. Use help sparingly and wisely, your numbers and your proof still decide the outcome.

Who should use Form 433-A (OIC), and when to file

Use Form 433-A (OIC) if you are an individual, wage earner or self‑employed, and you plan to submit Form 656 for an Offer in Compromise. Corporations and partnerships use Form 433‑B (OIC). If the IRS only asked for a short financial to support a payment plan, they may request Form 433‑F instead. Filing the right form matters because the IRS checks it against specific rules tied to your filing status.

Compliance first, then timing

File after you have met three bright‑line checks.

• All required returns are filed, or you have a valid extension for the current year.
• Your current estimated tax payments are made, and if you are an employer, your tax deposits for the current and prior two quarters are current.
• You are not in an open bankruptcy proceeding. If any of these are off, fix them first, then file, otherwise the IRS will return your package.

What to expect once you apply

Your package includes Form 433-A (OIC) with documentation, Form 656, the $205 application fee, and an initial payment unless you qualify for low income certification. The IRS may file a Notice of Federal Tax Lien while they review, and they will apply nonrefundable payments to your balance. If IRS does not decide within two years of the received date, your offer is accepted by law.

Pro tip, if you can file through your IRS Online Account, you can track status and make payments in one place, which helps you avoid missed steps during review.

Disqualifying situations that stop an offer cold

• Active bankruptcy case.
• Unfiled returns or missing required estimates.
• Trying to use the individual form for a business entity, the business uses Form 433‑B (OIC).
• Submitting when an IRS agent specifically requested a different financial, such as Form 433‑F for a streamlined payment plan. These are binary checks for the IRS, cure them before you submit.

Required documents, what to gather and why it matters

You are proving three things, completeness, recency, and verifiability. If a number is on the form, there should be a document that matches it, and dates should be current. The IRS will request more information or return your offer if proof is thin or outdated.

Core proof most filers need

• Pay stubs, at least one recent cycle for you and your spouse if applicable.
• Bank statements, the three most recent for each account, personal and business.
• Investment and retirement statements that show balances and account numbers.
• Loan payoff letters, mortgages, HELOCs, auto loans, lines of credit.
• Insurance and tax bills tied to real estate.
• Vehicle details, make, model, year, mileage, value printout for each car.
• Proof of special expenses, medical bills, court orders, child support, or other items above the standards.

If you are self‑employed, add a current profit and loss, three months of business bank statements, and your latest business return. That extra detail helps the reviewer connect deposits and expenses to your books.

A quick checklist you can copy

• Identity and household, IDs, Social Security numbers, and current address.
• Income, latest pay stubs, Social Security letter, pension statements, rental statements, and business P and L.
• Cash and accounts, three months of statements for checking, savings, PayPal, Venmo, brokerage, crypto exchanges where applicable.
• Assets, home and vehicle data sheets, valuation printouts, retirement and investment statements.
• Debts, payoff letters dated within 30 to 60 days, credit card statements, student loan statements.
• Expenses, invoices and receipts for claims above the IRS standards, health insurance, property tax, utilities, child care, court orders.

Keep file names consistent, for example, 2025‑06_BankName_Checking_JohnDoe_Stmt.pdf. A clean folder makes the IRS review faster and it lowers the chances of a follow up letter.

Step-by-step, how to complete Form 433-A (OIC) without missteps

You will move line by line. Match every entry to a document in your packet. If a number changes month to month, use the most current period and note any swings in a short cover memo.

Section 1, personal and household information

• Enter full legal names, SSNs or ITINs, dates of birth, current address, phone, and email.
• Include marital status and household members who share income or expenses.
• Tip, match names and addresses to your most recent filed return and your ID. Small discrepancies can slow ID verification.

Common mistakes to avoid

• Using nicknames that do not match W‑2s or IDs.
• Omitting a spouse who files separately, this still affects household analysis.
• Forgetting to include dependents who increase allowable standards.

Section 2, employment details for you and your spouse

• List employer names, addresses, start dates, pay frequency, and payroll type.
• Attach the most recent pay stub for each job that shows year‑to‑date totals.
• If pay varies, note the average of the last three months in a short note.

Tip for variable income

• If you earn tips, commissions, or gig income, include a simple worksheet showing the last 3 months by date and amount, then tie it to bank deposits.

Sections 3–4, assets and liabilities

Your goal is clarity. The IRS wants to see each asset, a reasonable value, and any debt tied to it.

• Bank accounts, list each account with the last four digits and the current balance, add three months of statements.
• Investments and retirement, show account type, balance, and any restrictions. Add statements.
• Vehicles, list make, model, year, mileage, and lien payoff. Add a value printout and a payoff letter.
• Real estate, show address, estimated value source, mortgage payoff, taxes, and insurance.
• Personal property, only list items with real resale value.
• Unsecured debts, include credit cards and personal loans with current balances.

Reviewer friendly move

• Add a one‑page “asset map” that lists each asset, its value source, the lien amount, and the net. This makes your package easier to follow.

Section 5, monthly income and expenses

• Income, wages, self‑employment draws, rental, pensions, Social Security, and any other recurring deposits.
• Expenses, list housing and utilities, transportation, health care, child care, taxes, insurance, and other necessary costs.

Tie it to proof

• For each expense above the IRS standard, add a short line note and attach support, for example, medical bills or a court order.
• If your utilities are bundled, highlight the lines on the bill so the totals are easy to read.

Sections 6–7, for self‑employed filers

If you are a sole proprietor or a single‑member LLC, complete the business sections.

• Business profile, entity type, start date, number of employees, and accounting method.
• Revenue and cost of goods sold, show monthly figures and a current year‑to‑date profit and loss.
• Business expenses, list ordinary and necessary costs, then attach three months of business bank statements.
• Inventory and accounts receivable, provide current balances with a simple aging if available.

Practical tip

• Reconcile deposits in your business bank statements to your revenue report for the same period. A one‑line reconciliation note prevents a follow up letter.

Documentation standards that keep your offer moving

• Completeness, if it appears on the form, there is a document in the packet.
• Recency, use statements from the last 90 days and payoff letters dated within 30 to 60 days.
• Verifiability, totals on the form match the totals on the statements, highlight key lines to help the reviewer.

Create a short cover memo, one page, that lists your packet contents and any unusual items. You are telling a clear financial story, not just stapling forms.

Quality checks before you submit

• Numbers tie, income and expenses foot, bank balances match statements, and asset values match your printouts.
• Names match, the form, IDs, and statements show the same names and address.
• Signatures, every required signature and date are present, and the date on Form 656 matches your packet.

A quick note on operational help If your CPA wants production support to assemble workpapers, name files, and keep review notes in order, this is where a disciplined delivery partner like Accountably can help. The goal is simple, reduce review friction so your practitioner spends time on strategy, not file chasing.

Allowable expenses and how the IRS scores your monthly budget

The IRS uses Collection Financial Standards to decide which expenses count and at what levels. Think of this as a two‑step process, classify each expense, then decide if it is within the standard or needs proof to exceed it.

Step 1, classify your expenses

• Allowable, necessary for health, welfare, or to produce income, for example, rent, utilities, food, transport, health insurance, and taxes.
• Disallowed, voluntary or discretionary costs, for example, extra credit card principal payments, aggressive retirement contributions, or elective tuition.
• Needs support, expenses above the standard that you believe are necessary, for example, higher housing due to a lease, out‑of‑pocket health costs, or required child care.

Step 2, apply standards the right way

• National standards, food, clothing, and personal care use household size tables.
• Local standards, housing and utilities, and transportation vary by county and metro area.
• Vehicle costs, separate ownership from operating, ownership relates to loan or lease, operating covers fuel, insurance, and maintenance.
• Health care, list insurance premiums and out‑of‑pocket costs separately.

Practical way to show higher actual costs

• Add a short note, for example, “Lease fixed through March 2026 at 1,950, see attached lease page 2.” Then include the lease copy and a rent ledger or recent bank proof.

Asset equity, a clear method that reduces debate

For most assets, the IRS looks at net realizable equity, often based on a quick sale value, then subtracts any senior liens. Your job is to show a reasonable value and the current payoff.

• Vehicles, use a third‑party valuation printout, list mileage and condition, attach the payoff letter.
• Real estate, include a valuation source and the mortgage statement with principal balance, property taxes, and insurance.
• Investments and retirement, provide current statements, note any early withdrawal or tax hits that lower realizable value.

Think like a reviewer. If someone who does not know you opens your packet, can they find the value source and the payoff in under a minute for each asset? If yes, you are in good shape.

What not to include as monthly expenses

• Voluntary retirement contributions or extra loan principal payments, unless you have a written requirement from an employer or a court order.
• Unsecured debt payments beyond minimums, the IRS generally does not count these as necessary expenses for offer scoring.
• Unverified “cash” expenses with no receipt trail.

A simple example to check your math

• Income, 5,200 take‑home pay each month.
• Allowable expenses, 4,650 after applying standards.
• Disposable income, 550.
• If your numbers look like this, your offer amount will depend on your chosen payment option and any asset equity. Use this quick view to decide if an OIC, a partial‑payment plan, or CNC is your best path.

Organizing your packet for a faster review

• Put Forms 433‑A (OIC) and 656 on top, then your cover memo.
• Next, bank statements, pay stubs, and income proofs.
• Then assets, grouped by type, with values and payoffs.
• Final section, expenses that exceed standards with proof, for example, medical, child care, or special circumstances.
• Use consistent file names and page numbers so you can reference items in a phone call with the IRS if needed.

A brief operations note Many offers are delayed because documents are missing or naming is inconsistent. If you are a firm, and you want reliable prep that protects reviewer time, thoughtful offshore delivery, with SOPs, structured workpapers, and layered review, can keep your offer files clean without adding chaos. That is the lane Accountably focuses on for CPA firms, not resume farming, just disciplined execution.

If your numbers do not support an Offer in Compromise, real alternatives

Partial Payment Installment Agreement, PPIA

If you can pay something but not enough to clear the balance within the statute, a PPIA sets a lower monthly payment based on your Form 433‑A numbers. The IRS may revisit your ability to pay, so keep records current.

Currently Not Collectible, CNC

If allowable expenses consume income, request CNC. The IRS will pause enforced collection, then review your case periodically. Keep filing and paying current year taxes to avoid falling out of status.

Standard installment agreement

If you can full pay over time, a standard plan may be faster and simpler. Higher balances or longer terms often require a financial statement, so keep your 433‑A ready.

Penalty relief and special situations

• First‑time abatement, available if you have a clean filing history and meet criteria.
• Reasonable cause, for documented events like serious illness or disasters.
• Exceptional circumstances OIC, if paying in full would create serious hardship even if numbers seem to allow it, provide detailed proof.

Frequently asked questions

What is the difference between Form 433‑A and 433‑A (OIC)?

Form 433‑A is a broad financial statement for collection actions. Form 433‑A (OIC) is tailored to Offers in Compromise and focuses on asset equity and disposable income used to price your offer. Expect tighter documentation and closer review.

Who qualifies for an IRS OIC?

You qualify when your documented reasonable collection potential is less than what you owe and you meet all compliance checks. Strong proof of income limits, necessary expenses, and limited realizable equity is essential.

What is the difference between Form 433‑A and 433‑F?

Form 433‑F is a shorter financial used for many payment plans. Form 433‑A is deeper, with more detail on assets and expenses, and is commonly used for complex cases and offers.

How do I improve my chances of acceptance?

Match every figure to proof, organize your packet, apply the expense standards correctly, and time your submission after you are fully compliant. If your numbers are borderline, consider a different plan rather than forcing an offer that will stall.

Final checklist before you submit

• All required returns filed, estimates or payroll deposits current.
• Forms 433‑A (OIC) and 656 completed, signed, and dated.
• Application fee and initial payment included, unless you qualify for a low‑income waiver.
• Three months of bank statements, recent pay stubs, investment and retirement statements.
• Asset values and payoff letters included and easy to find.
• Proof for any expense above the standard.
• Cover memo attached with a short summary of unusual items.

Where Accountably fits in, only if you need structured help

If you are a firm that wants reliable prep, consistent workpapers, and fewer review loops on OIC files, Accountably provides SOP‑driven offshore delivery that works inside your systems with clear SLAs and layered quality checks. If you are a taxpayer, ask your CPA whether a structured prep and review process would speed your case. Either way, the numbers and proof remain yours, the structure simply helps you present them cleanly.

Conclusion

You now have a clear plan to complete Form 433‑A (OIC), gather proof, and present a package the IRS can verify quickly. Work in order, tie every figure to a document, and apply the expense standards with care. If the math supports an offer, file with confidence. If not, choose the path that fits your numbers, PPIA, CNC, or a standard plan, and stay compliant going forward.