IRS Offer In Compromise Forms and Necessary Documentation

IRS offer in compromise forms

There are many documents and forms required to apply for an Offer in Compromise (OIC). Here’s a look at the most important Offer in Compromise forms.

IRS Form 656

This is the form you use to apply for an OIC. However, if you are applying for an OIC because you doubt the tax liability is correct, then use the next form.

IRS Form 656-L

If you are applying because you doubt your tax liability (part of it or all), you need to submit this form. Furthermore, Form 433-A (OIC) is not required in this situation.

IRS Form 433-A (OIC)

This eight-page form is also known as the Collection Information Statement for Wage Earners and Self-Employed Individuals. Moreover, it requires information on your income, assets, liabilities, and expenses. The IRS uses the information on this form to determine your Reasonable Collection Potential (RCP). The RCP is the sum of money the IRS believes you can pay in your current financial situation. This form is not required if you doubt the tax debt.

IRS Form 433-B (OIC)

This form is also known as the Collection Information Statement for Businesses.  Consequently, it is for businesses applying for an OIC. Corporations, Partnerships, and single member LLCs classified as a corporation use this form. Once again, the IRS uses the information on this form to determine the total sum of money your business can pay. If you want to settle both business and personal taxes, you need to complete both Form 433-A (OIC) and 433-B (OIC).

Other Important Documentation Required for an OIC

In most cases, if applicable, you need to submit three months worth (photocopies) of the following documents. These document types will also come in handy when completing the IRS offer in compromise forms above.

  • Credit card statements
  • Mortgage payments
  • Bank statements
  • Car loan statements
  • Investment statements
  • Health care statements
  • Child care bills and receipts
  • Housing expenses (leases, rental records, etc)
  • Transportation costs
  • Other expenses (groceries, utility bills, etc)
  • Copies of the tax returns for the years related to the tax debt

The OIC program has tough requirements and eligibility standards. The IRS makes the process hard to qualify for as it is only available to people who really need it.

It’s best to get a licensed tax professional or a tax resolution company to help you. A licensed tax professional can analyze your situation and determine if you qualify for an Offer In Compromise. If you do not qualify, they can point you in another direction. Feel free to request a free consultation by calling the phone number above.