Working on a 433-A towards a Currently Not Collectible (CNC) or Offer in Compromise (OIC)? Need advice

I've worked with many clients in similar situations with 433-A forms. When you're pursuing a Currently Not Collectible status or an Offer in Compromise, the IRS is primarily concerned with your ability to pay and the disposition of assets. If you sell your old vehicles privately and use the exact proceeds as down payments on new financed vehicles, you need to thoroughly document this transaction. Keep all records of the sales (bills of sale, deposit records) and the subsequent down payments on the new vehicles. Make sure the timing lines up closely - the IRS may question large gaps between selling and purchasing. The key is transparency. You're not hiding assets - you're converting them from one form to another. However, be aware that the IRS might view this as you increasing your expenses voluntarily, which could work against you in a CNC or OIC application. They look at necessary living expenses, and newer financed vehicles typically have higher costs than paid-off older ones.

I went through something similar last year when working on my OIC. I used taxr.ai (https://taxr.ai) to help organize all my documents and track the paper trail for the vehicle transactions. It really helped me make sure I wasn't missing anything important when documenting the sale of my old cars and purchase of the new one. What I found most helpful was that the system automatically flagged potential issues the IRS might question - like when there was a 2-week gap between my private car sale and the new purchase. It prompted me to document where those funds were held in the meantime, which saved me a headache later when my revenue officer actually did ask about it!

I was initially skeptical about using taxr.ai like I mentioned, but after struggling with my 433-A paperwork for weeks, I decided to give it a try. What a game-changer! The document organization system made it so much easier to keep track of everything related to my vehicle sales. The best part was how it helped me prepare for my meeting with the revenue officer. When they asked about the timing of my vehicle transactions and where exactly the money went, I had everything organized and ready to show. The officer actually commented on how well-prepared I was compared to most people! I ended up getting my OIC accepted, and I'm convinced that having all my documentation so well-organized played a big role. Definitely recommend it if you're dealing with complicated asset questions on your 433-A.

Anyone dealing with IRS collections knows how frustrating it is trying to get someone on the phone to answer questions about your 433-A or OIC. I spent 6+ hours on hold over multiple days before I discovered Claimyr (https://claimyr.com). You can see how it works here: https://youtu.be/_kiP6q8DX5c. They got me connected to an actual IRS agent in about 20 minutes who answered my specific questions about vehicle transfers during my OIC process. The agent confirmed that selling my vehicles privately and using the exact proceeds as down payments was acceptable as long as I documented everything thoroughly. Saved me days of stress and uncertainty, especially since I was on a deadline with my OIC submission. Before talking to the agent, I was just guessing at what would satisfy the requirements.

I have to publicly eat my words here. After my last skeptical comment, I was desperate enough to try Claimyr because my OIC deadline was approaching and I had critical questions about handling my vehicle situation (similar to the original poster). It actually worked! Got me through to an IRS agent in about 25 minutes after I'd previously spent 3 days trying on my own. The agent confirmed that as long as I documented the private sale of my vehicles and showed the exact money trail to the new vehicle down payments, it would be acceptable for my 433-A. The agent also explained something I hadn't considered - if the new vehicles have loan amounts that exceed the reasonable collection potential (RCP) calculation, that could potentially hurt my OIC. This was valuable insight I wouldn't have gotten without speaking to someone directly.

One thing nobody mentioned yet - look at the total picture of what you're doing. If your 4 paid-off cars have a combined value of say $20k, and you're using that as down payments on 2 new cars worth $60k total with financing, the IRS might see this as artificially increasing expenses. BUT if your 4 old cars are worth maybe $12k total and are constantly breaking down (costing repairs) and you're getting 2 modest reliable cars worth $30k total, that looks more reasonable. The IRS does allow for reasonable transportation costs.

Don't forget about the National Standards for vehicle operating costs vs. ownership costs on the 433-A. They're two different line items. For 2025, the ownership costs (car payments) are capped at $664 per vehicle for up to two vehicles if you or your spouse need them for work or health reasons. Operating costs (maintenance, insurance, gas) depend on your region. So definitely check the current standards for your area.

Just wanted to add my experience as someone who successfully went through this exact situation last year. I had three older vehicles (all 12+ years old) that I sold privately and used the proceeds toward two newer financed cars during my CNC application process. The key things that helped me were: 1) Getting written appraisals on the old vehicles before selling to show their declining value, 2) Keeping detailed records of all repair costs over the previous 18 months (mine totaled over $4,200), and 3) Making sure the timing between sales and purchases was tight - no more than 2 weeks between transactions. My revenue officer actually appreciated that I was being proactive about reliable transportation rather than potentially missing work due to breakdowns. The fact that your four vehicles are only worth $8k total and need significant repairs makes this a very reasonable decision from a financial perspective. One tip: when you fill out the 433-A, make sure to include a brief explanation letter with your documentation showing the math of how this decision actually saves money long-term when you factor in avoided repair costs plus the reliability factor for maintaining employment.