Offer in Compromise

Step 3: Financial Statements

Financial statements summary

You will use Form 433-A or Form 433-B to report your financial condition and calculate your settlement amount.  Your settlement amount is also referred to as Reasonable Collection Potential (RCP).

The IRS may compare information reported on your financial statements with bank statements, settlement reports, and receipts for proof of payment. Other documents might be later requested of you to substantiate, or prove, information reported on Form 433-A or Form 433-B.

Which form to use: 433-A or 433-B

Use Form 433-A if any of the following apply to you:

  • You are an individual who has a tax liability from Form 1040, Individual Income Tax Return
  • You are a wage earner, paid on Form W-2 by a company that you work for
  • You are currently Self-Employed or have had Self-Employment income which you owe taxes for
  • You are an individual who is personally liable for partnership tax liabilities
  • You are a single-member LLC
  • You are a sole proprietor

 

Use Form 433-B if any of the following apply to you:

  • You have a corporation
  • You have a partnership
  • You have an LLC classified as a corporation

If criteria for Form 433-A and Form 433-B both apply to you, then you must prepare and submit BOTH financial statements.

Download financial statement forms

Depending on your situation, download one or both forms:

Form 433-A

Form 433-B

How to complete financial statements

Your financial statements will ultimately determine whether your offer gets approved and directly affects how low your settlement offer can be. We’ll guide you through this process so you can get the best result possible.

Filling the financial statements is fairly self-explanatory. For the most part, you will be including information that you are very familiar with. The IRS includes clarification for the more complicated line-items on the form.

For step-by-step instructions and clarification on certain items on the financial statements, contact Transaccts for pre-recorded video instructions.

After completing your financial statements,

you (and your spouse, if applicable) must sign under Section 10.