Quick overview

An OIC reconsideration packet collects the new or changed financial facts the IRS needs to reopen a denied Offer in Compromise. The packet’s goal is to prove the original decision should change because of updated income, expenses, assets, or newly discovered documentation. Refer to the IRS OIC overview for program rules and eligibility criteria: https://www.irs.gov/credits-deductions/individuals/offer-in-compromise (IRS).

Why a complete packet matters

The IRS denies many OICs because the financial picture is incomplete or inconsistent. A tight, well-documented reconsideration packet reduces questions, shortens review time, and improves the odds an examiner will accept a revised offer. In my 15 years advising taxpayers, cases with clear expense verification and a short, prioritized cover letter are the most successful.

What to include (step-by-step)

  1. Read the denial letter: follow any special submission instructions and note the examiner’s name and address.
  2. Prepare a one‑page cover letter that: identifies the taxpayer and case number, states you are requesting reconsideration, summarizes the material change(s), and lists enclosed documents in order.
  3. Updated financial forms:
  • Form 656 (Application for Offer in Compromise) — if you change the offer amount. See IRS forms: https://www.irs.gov/forms-pubs (IRS).
  • The appropriate Collection Information Statement (Form 433 series) completed and signed.
  1. Supporting documentation (organized and tabbed): pay stubs, bank statements (last 3 months), proof of unemployment, medical bills, cancelled checks, court orders, and bills for recurring expenses.
  2. Asset documentation: recent vehicle valuations, appraisal receipts, recent sales attempts for nonexempt property.
  3. Proof of extraordinary items: medical records, insurance denials, bankruptcy filings, sudden job loss documentation, or separation agreements.
  4. If applicable, a signed statement explaining errors or omissions in the original submission and why new documents were not previously available.
  5. Submission: send by certified mail or follow instructions in the denial letter; retain copies and a submission log.

How the IRS evaluates reconsideration

The IRS looks for material changes that affect Reasonably Collectible Amount (RCA) calculations: net disposable income and collectible asset equity. New, verifiable documentation that lowers monthly disposable income or increases reasonable expenses may change the examiner’s RCA and acceptance decision. See how the IRS evaluates offers: https://www.irs.gov/credits-deductions/individuals/offer-in-compromise (IRS).

Real-world example (practical insight)

I represented a taxpayer who’d been denied because medical expenses weren’t documented. The reconsideration packet included itemized medical bills, a physician’s letter, and proof of insurance denials. After organized presentation and a reduced revised offer, the IRS accepted the reconsideration. The key was reliable, dated proof and a clear reconciliation of numbers.

Who should file a reconsideration

File when you have: a significant change in income, new medical or household expenses, recent asset loss or an error in the original application. Also file if relevant documentation existed at the time of the first submission but was inadvertently omitted and can now be verified.

Practical tips and checklist

  • Be concise: the cover letter should be one page; use an itemized enclosure list.
  • Order documents to match your financial statement line items.
  • Use dated, third‑party documents when possible (bills, bank statements, medical provider invoices).
  • Include calculations: show how new expenses change monthly disposable income and how they affect the proposed offer amount.
  • Keep originals but submit clear copies; mark the packet as “Reconsideration – Offer in Compromise Denial Dated [date].”

Essential documents (minimum):

  • Form 656 (if revising offer)
  • Completed Form 433 (series) appropriate to your case
  • One‑page cover letter summarizing changes
  • 3 months of bank statements and recent pay stubs
  • Itemized bills and third‑party proof of extraordinary expenses
  • Valuation or sale documentation for nonexempt assets

For a broader checklist and common pitfalls, see our Offer in Compromise application checklist: Offer in Compromise Application Checklist: Documents and Common Pitfalls.

Common mistakes to avoid

  • Resubmitting the same packet without new evidence.
  • Missing signatures or dates on forms.
  • Failing to reconcile numbers between the Cover Letter, Form 433, and bank statements.
  • Submitting unsigned or incomplete third‑party documentation.

For guidance on what evidence strengthens a reconsideration request, see: When to Request an Offer in Compromise Reconsideration: Evidence That Helps.

Expected timeline and follow up

Processing varies. Many reconsiderations take several weeks to a few months; complex packets take longer. Keep a submission log and follow up if you haven’t received an acknowledgement within 30 days. Maintain routine tax compliance while the packet is under review.

Frequently asked questions

  • How soon after denial can I request reconsideration? Immediately, if you have new or corrected documentation. If circumstances change later (job loss, medical emergency), submit then.
  • Do I need a new offer amount? Only if your recalculated disposable income or equity produces a different Reasonably Collectible Amount; otherwise submit supporting documents that justify the original offer.

Related reading on FinHelp

Sources and further reading

Professional disclaimer

This article is educational and reflects common practice and examples from my 15 years advising taxpayers. It is not individualized tax advice. Consult a qualified tax professional or the IRS for guidance tailored to your situation.