Today, there are at least five variations of IRS Form 433, and they all serve slightly different purposes. In this piece, we will tell you about the peculiarities of using and filling out the 433-A (OIC) Form.
OIC stands for Offer in Compromise. We have previously told you about filing Form 433-A, and you probably remember that it serves to gather certain personal information about the wage earners and self-employed US citizens. Generally, by means of Form A, you can request the IRS to review the opportunity to make a tax debt deduction. But Form 433-A (OIC) explicitly serves for the taxpayers to file an offer in compromise.
It is important to understand the definition of the term “Offer in Compromise” to know if you can file it. By submitting a compromising tax offer, you can expect the IRS to legally allow you to cover your existing tax indebtedness at a lower cost. This option exists for individuals who cannot pay their tax debts in full for some reason. Thus, if you are currently facing any financial hardships, you can try and file such an offer.
Whether or not the IRS decides to reduce the amount you owe them in taxes depends on your personal circumstances. However, there are some universal requirements that the applicant needs to meet to be eligible to file the offer. Among these respective requirements are the following ones:
You, as an applicant, need to understand that the IRS tends to approve the applications for Offer in Compromise when the taxpayer sets the most reasonable amount they can withhold within the specified time period. We have to warn you that the OIC program is not meant for everybody. Therefore, we advise you not to submit Form 433-A (OIC) until you explore other payment options or dealing with your existing tax indebtedness.
As of April 27, 2020, the applicant asking for a tax compromise should pay the filing fee of $205. Typically, the fee is non-refundable unless the IRS rejects your completed form as a new application or your household qualifies as low-income. In case of the latter, you should submit the respective certification to prove your status.
Please note that all offers should be submitted as part of IRS Form 656 (the new requirement that came into force in April 2020). You can find the revised version of the 656 Form on the official IRS website. This particular form includes all the necessary guidelines on receiving the low-income certification.
Other IRS Forms for Trusts and Estates
Look through some related IRS forms that wage earners and self-employed individuals might find useful.
We encourage you to use our latest software developments to build and customize any legal form you need. With our online PDF editor, you can fill out and amend your form online effortlessly. But if you think you do not have the skill or qualification to fill the form out by yourself, you can always use legal assistance. Once you decide to hire a tax professional to deal with the paperwork for you, ensure to check their license.
Below, you will find a comprehensive guide on how to fill out Form 433-A (OIC).
Insert the Required Personal Info
Please read the short instructions and recommendations at the top of the form to find out if you are eligible. Then, you should submit your personal info, including full name, date of birth, physical address, marital status, and contact information.
If you are currently married, please ensure to fill in your spouse’s full name, date of birth, and SSN (as shown below).
If you have any dependent household members, please list them in the table below. Enter their name, age, relationship to the taxpayer, and the amount of contribution made to the household income (if applicable).
Provide Info on Your Employer
Complete this section only if you or your spouse is officially employed. If you are not a wage earner, you can skip this section and proceed to the next one.
But if you are a wage earner, you need to enter the employer’s name, physical address, occupation, and salary payment period. Please ensure to indicate in this section if you own a proprietorship.
The same set of questions applies to your spouse (if you have one).
List Your Personal Assets
This next section constitutes a large table which is meant to estimate your fortune and current financial situation in general. Here, you need to list the amounts of both your domestic and foreign cash investments, market and online accounts (if any), bank deposits, savings, and possessions you have in real property, motor vehicles, and other estates. The IRS will need to assess the total value of your assets to make a final decision on your debt deduction.
Enter the Required Info on Self-Employment
If you are a self-employed US citizen willing to put an offer in compromise, you should fill out this section. The required information here only concerns your business and includes the company’s name, the physical address of the business office, contact daytime telephone number, EIN, business activity type, and its legal form (LLC, corporation, partnership).
List All Your Business Assets
Here, you should list all the business-related properties that you own and use, lease, or rent. The properties may include equipment and machinery, books, business vehicles, and real estate, as well as cryptocurrency.
Right below the table, you should answer the questions if you have any notes or accounts receivable.
Indicate Actual Monthly Business Income and Expenses
Calculate your gross monthly business income and expenses and insert the respective amounts in the corresponding columns.
If you have already filed a Profit and Loss statement, you should only fill in lines 17 and 29 of this section.
Provide the Household Income and Expenses Info
Here, you should insert exhaustive information on the monthly income of your household, including the wages, unemployment allowances, pensions, interest income, social security, or life insurance payments.
Once you are done with the income rates, please proceed to fill out the gross monthly expenses of your household. The expenses normally include food, accommodation and housing, clothes, vehicles, school expenses for the minors (if applicable), taxes, debt payments, healthcare, insurance, and so on. Depending on your individual situation, fill out the respective boxes.
Insert Your Minimum Offer
Calculate your minimum Offer in Compromise for the IRS to review. Make sure to build your offer on your real paying capacity, but the offer itself should be more than zero US dollars. Otherwise, there is no point in filing this document in the first place.
Provide Other Relevant Information
The IRS might need additional information to decide on giving you the tax indebtedness deduction. If you feel like there are circumstances in your life that can influence the authority’s decision, you should definitely list them in Section 9.
It may be bankruptcy, ongoing litigation, or other legal processes. Fill in the lines that refer to your particular case.
Put the Current Date and Signature
Please remember that you and your spouse have to sign the document as the sign of consent to assure the submitted information is true and accurate. Put the current calendar date next to your signature.
Once you finish completing your form, you must file it with the IRS office. The Service then takes their time to review your papers, and if they approve your application, you will have to meet other conditions and requirements listed in Section 7 of the 656 Form. You can find the form template online to learn what they are.
Please note that if your application is approved, all your federal tax liens will not be released until you satisfy the offer completely. Also, some of your personal information will be available to the public view (but only via public inspection filing).
But if your application for a debt deduction is finally rejected, you should make an appeal within 30 days by using the 13711 Form. You can also ask for the IRS Independent Office of Appeals assistance to get legal advice.