Offer in Compromise: What Bank Statements the IRS Asks For (and What It Looks For)

The offer in compromise in brief

From the IRS Offer in Compromise page:

• Eligibility: you must have filed all required tax returns, made required estimated tax payments, not be in an open bankruptcy proceeding and, if you are an employer, have made required federal tax deposits for the current quarter and the last two quarters.
• What the IRS considers: "your income, expenses, and asset equity."
• Cost to apply: a $205 application fee plus an initial payment. With a lump sum offer, you pay 20% of the offer amount with the application and the rest in five or fewer payments after acceptance. With a periodic payment offer, you make the first payment with the application and keep paying while the offer is considered.
• Low-income qualification: individuals who qualify do not pay the fee or the initial and periodic payments while the offer is considered. Only individuals can qualify.
• The forms: the offer itself is Form 656; the instructions and forms come together in the Form 656-B booklet. The IRS also has an Offer in Compromise Pre-Qualifier tool to check eligibility first.

Which statements the forms ask for

The current revisions of both forms are dated April 2026. Their attachment checklists list the bank statements explicitly.

The checklists also ask for:

• 433-A (OIC): the most recent pay stub from each employer; the most recent statement for each investment and retirement account; records of digital assets you hold; the most recent statement for other income (pensions, Social Security, rental income, sharing economy and app-based income, and more); lender statements for mortgages and vehicle loans; and a completed 433-B (OIC) if you or your spouse have an interest in a business other than a sole proprietorship.
• 433-B (OIC): a current profit and loss statement covering at least the most recent 6 to 12 months, if appropriate; lender statements; and a statement of accounts and notes receivable.

Two words in the checklists matter more than they look. "Complete" means every page of each statement. "Each" means every account, including the ones with small balances, online-only accounts, stored value cards and accounts held abroad.

Where the statements feed into the form

The statements are not just attachments. They are the evidence for specific sections:

Asset sections (Section 3 of 433-A (OIC), Section 2 of 433-B (OIC)). These list every account with its current balance, "domestic and foreign." On the 433-A (OIC), the total of the bank accounts is reduced by $1,000 before it counts toward the offer. The balances you enter should match the most recent statements you attach.

Business income and expenses (Section 6 of 433-A (OIC), Sections 3 and 4 of 433-B (OIC)). The forms let you average 6 to 12 months of income and expenses to get monthly figures, or attach a current P&L. If you use the amounts from your most recent Schedule C and business has changed significantly within the past year, the 433-A (OIC) says a current P&L should be submitted to substantiate them.

Household income and expenses (Section 7 of 433-A (OIC)). This section asks for the household's average gross monthly income, including income that is not taxable and income from sharing economy work and digital platforms. Expenses are measured against the IRS Collection Financial Standards: you get the full national standard for food, clothing and similar items and for out-of-pocket health care, but for housing, utilities and vehicle costs you get the amount you actually spend or the standard, whichever is less. The statements are where actual spending shows.

Minimum offer (Section 8 of 433-A (OIC), Section 5 of 433-B (OIC)). Remaining monthly income (income minus allowable expenses) is multiplied by 12 if you will pay the offer in five or fewer payments within five months, or by 24 if you will pay it in 6 to 24 months, and added to your asset equity. Every dollar of monthly income the statements show above what the form reports raises that number by 12 or 24 dollars.

Other information (Section 9 of 433-A (OIC)). The form asks whether, in the past 10 years, you transferred any asset worth more than $10,000 for less than its full value. Large withdrawals and transfers on the statements are where that question gets tested.

What an examiner checks the statements against

The IRS describes its review in terms of income, expenses and asset equity. In practice, reading a set of statements against the form comes down to a handful of checks. Run them yourself first.

1. Do deposits support the income on the form? Total deposits by month, minus transfers between your own accounts, loans and refunds, should line up with the income reported. Regular deposits that the form does not explain (a side business, rental income, payment-app income, a spouse's paycheck) are the most common problem.
2. Do the expenses match? Rent, car payments, insurance, child care and other recurring payments claimed on the form should appear on the statements in about the same amounts. Claimed expenses that do not appear invite questions; spending well above the standards does not raise your allowance.
3. Do the balances match the asset section? The balance you listed for each account should be the balance on its most recent statement.
4. Is every account listed? A statement line such as "TRANSFER TO SAV ...4421" or a regular payment to a brokerage or crypto exchange points to an account. If that account is not on the form, expect a request for it.
5. Where did large amounts go? Large withdrawals, cash, transfers to family members and asset purchases are read against the transferred-assets question and against the balances.
6. Are the months complete? A missing month or a missing page invites a request for the full statement, which delays the offer.

How to prepare the statements

1. Collect every account, every page

Start from the list of accounts on the form, then look at the statements themselves for accounts that are not on the list. Request missing statements from the bank before you file rather than after the examiner asks. For older or closed accounts, see how to get old bank statements, including from a closed account.

2. Convert them and confirm they are complete

Three to six months per account is a manageable stack for one client and a large one for a resolution practice with dozens of open offers. A bank statement converter such as DocuClipper turns PDF and scanned statements into Excel and checks that each statement ties: opening balance plus deposits minus withdrawals equals the printed closing balance. A statement that does not tie usually has a missing page.

On Business plans, date gaps analysis shows any month missing for any account, and undisclosed account detection lists account numbers the transactions refer to that have no statements in the file, which is check 4 above done for you.

3. Total income and expenses by month

• Income: label each deposit as income or not. Transfers analysis pairs transfers between the taxpayer's own accounts so they are not counted twice, and income analysis totals income by month and by payer, with transfers, refunds and loan proceeds left out.
• Expenses: total recurring payments by the form's categories. Recurring transactions analysis lists repeating payments such as rent, loan payments and insurance with their amounts and frequency.

For self-employed taxpayers, the same work produces the P&L the form asks for. See how to fill out Schedule C from your bank statements for mapping business expenses to categories.

4. Reconcile to the form, then explain what is left

Before the package goes in, put the statement totals next to the form and resolve each difference: a deposit to explain, an expense to document, an account to add. Write short explanations for large one-time items (an insurance payout, a loan, a car sale) and attach the support.

5. If returns are missing, file them first

An offer cannot be considered until all required returns are filed. If the taxpayer has unfiled years, those come first; see catching up on unfiled tax returns from bank statements. If payment-app income is involved, reconciling a 1099-K to bank deposits explains the gross-versus-net difference that otherwise looks like unreported income.

For tax-resolution practices

The statement work is the same on every case: collect, convert, check completeness, total income and expenses, find the accounts nobody mentioned. DocuClipper does that part across a client's whole stack of statements in one project, with 99.9% accuracy and a balance check on every statement, so the time goes into the offer strategy instead of data entry. Advanced analysis (date gaps, transfers, undisclosed accounts, income and recurring transactions) is on Business plans, from $159/month. See also how tax pros automate bank statement analysis for IRS cases.

FAQ

How many months of bank statements do I need for an offer in compromise?

Form 433-A (OIC) asks individuals for complete bank statements for the three most recent months, and, if they operate a business, the six most recent complete statements for each business bank account. Form 433-B (OIC), for business entities, asks for the six most recent complete statements for each business account and the three most recent for each investment account.

Which form do I use, 433-A (OIC) or 433-B (OIC)?

Individuals, including sole proprietors, use Form 433-A (OIC). Corporations, partnerships and LLCs use Form 433-B (OIC). An individual who also owns an interest in a business entity other than a sole proprietorship completes both.

What does the IRS look for in the bank statements?

The IRS says it considers your income, expenses and asset equity. The statements are the evidence for all three, so an examiner compares them with the form: whether deposits match the income you reported, whether expenses match what you claimed, whether balances match the asset section, and whether money went to accounts or people the form does not mention.

Do I have to send every page of the statement?

The forms ask for complete statements. Send every page, including pages that only carry disclosures, so nothing looks withheld and the opening and closing balances can be checked.

What does an offer in compromise cost to apply?

The IRS charges a $205 application fee plus an initial payment, unless the individual meets the low-income qualifications. With a lump sum offer, 20% of the offer amount is paid with the application; with a periodic payment offer, payments continue while the IRS considers the offer.

Can bank statement software help with an offer in compromise?

It handles the counting. A converter turns the statements into spreadsheets and checks that each one ties to its printed balances; analysis tools total income and recurring expenses by month and flag transfers, missing months and accounts the statements mention but nobody produced. The judgment calls stay with the representative.

Written by the DocuClipper editorial team. Last updated October 30, 2026. General information, not tax or legal advice.