If you want to know how you can file for an Offer In Compromise, below you will learn about what to do to get an IRS OIC for personal or business taxes.
See our video explanation of how to file for an offer in compromise if you prefer to watch it.
First Get The Correct Offer In Compromise Forms
First, you need to fill out the proper forms:
Form 433-A(OIC) for individuals or Form 433-B(OIC) for businesses. See our tax relief forms page to get the appropriate forms for your Offer In Compromise
This form is a financial statement. The IRS uses this to determine the collectibility of the person or business applying for a tax settlement. Sole Proprietorships should use Form 433-A(OIC).
Form 656 is the same form for both individuals and businesses
Here you put how much you are offering and payment details. Make sure to check for a fee and down payment waiver if you qualify and are applying as an individual. Businesses do not qualify for fee or down payment waivers.
Financial Documents for Individual OIC
At the end of Form 433-A(OIC) and Form 433-B(OIC) there is a list of all the documents that need to be submitted with an Offer In Compromise.
For individuals filing Form 433-A(OIC), these docs are:
- Copies of the most recent pay stub, earnings statement, etc., from each employer
- Copies of the most recent statement for each investment and retirement account
- Copies of the most recent statement, etc., from all other sources of income such as pensions, Social Security, rental income, interest and dividends (including any received from a related partnership, corporation, LLC, LLP, etc.), court order for child support, alimony, and rent subsidies.
- Copies of individual bank statements for the three most recent months. If you operate a business, copies of the six most recent statements for each business bank account.
- Copies of the most recent statement from lender(s) on loans such as mortgages, second mortgages, vehicles, etc., showing monthly payments, loan payoffs, and balances
- List of Notes Receivable, if applicable
- Verification of delinquent State/Local Tax Liability, if applicable
- Documentation to support any special circumstances described in the “Explanation of Circumstances” on Form 656,
- If applicable Attach a Form 2848, Power of Attorney, if you would like your attorney, CPA, or enrolled agent to represent you and you do not have a current form on file with the IRS.
- Completed and signed Form 656
Financial Documents for Business OIC
Here are the docs needed for a business filing IRS Form 433-B(OIC):
- A current Profit and Loss statement covering at least the most recent 6–12 month period, if appropriate
- Copies of the six most recent bank statements for each business account and copies of the three most recent statements for each investment and retirement accounts
- If an asset is used as collateral on a loan, include copies of the most recent statement from lender(s) on loans, monthly payments, loan payoffs, and balances
- Copies of the most recent statement of outstanding notes receivable
- Copies of the most recent statements from lenders on loans, mortgages (including second mortgages), monthly payments, loan payoffs, and balances
- Copies of relevant supporting documentation of the special circumstances described in the “Explanation of Circumstances” on Form 656, if applicable
- Attach a Form 2848, Power of Attorney, if you would like your attorney, CPA, or enrolled agent to represent you and you do not have a current form on file with the IRS. Make sure the current tax year is included.
- Completed and signed Form 656
Copy it all, mail it out USPS Certified with Return Receipt
Either scan up the entire package you are sending, or make a copy of it. Mail it out by USPS Certified Mail with a return receipt. Make a copy of the certified mail certificate, save the return receipt when you receive it.
You should get a letter back in about 30 days that the IRS is processing your offer. That letter will have a date on it by which they should be contacting you again.
If your case was in collections or assigned to a Revenue Officer, let them know you submitted an OIC. Then just wait for the OIC department’s response.
If you don’t want to do it yourself
If the task seems daunting or you just don’t want to do it yourself, we can help.
If you think you could benefit from the help of a tax attorney, schedule a consultation with one of our expert tax attorneys here or call us at (888) 515-4829.
We will give you an accurate assessment of whether you qualify for an Offer In Compromise or not. No sales gimmicks, just an honest opinion.
Sometimes Offers are not the best way to resolve a case. If you are not sure, have someone evaluate the options for you. I would not trust the opinion of a salesperson at a tax relief company.
