IRS Form 433-A

What Is IRS Form 433-A?

Form 433-A is the Collection Information Statement for Wage Earners and Self-Employed Individuals. This form provides details about your financial situation, including assets and debts, to let the IRS know what you’re working with. 

IRS 433-A is typically requested when you apply for a payment plan, but you owe over a certain threshold or have other potentially disqualifying criteria. The IRS sometimes requests Form 433-F, but if a revenue officer is working on your case, they’re more likely to request Form 433-A. 

What Is Form 433-A (OIC)?

Form 433-A (OIC) is a special version of the standard 433-A form, and it’s specifically used for people who are applying for an office in compromise (OIC). You can apply for an OIC if you can’t afford to pay in full, or if there are special circumstances that warrant settling your tax debt for less that the full amount.

An OIC is much more difficult to get approval for than other resolutions. Most people don’t qualify, and it requires a carefully prepared application.

When Should You Use Form 433-A?

If you are seeking any type of resolution to an IRS tax liability that is personal to you, a Form 433-A will likely be the financial statement that will allow you to make your proposal to the IRS. We at McLaud Law P.C. almost always use this form to analyze a client’s finances and their eligibility for different types of relief because it is so often the way the IRS will be doing the same.

What’s Included in Tax Form 433-A

There isn’t anything too surprising on Form 433-A. You’ll have to give your basic personal details, like your address and Social Security Number, information about your employment and how you make money, a list of your personal and business assets, any investments, credit information, and your monthly budget.

Make sure you are as detailed as possible, and always double-check your numbers to ensure accuracy and include third-party documentation to strengthen the legitimacy of your financial statement. You want this form to correctly spell out your finances so the IRS will have all the information it needs to approve your offer in compromise.

Talk to a tax expert if you’re not sure what information to include on Form 433-A.

Other Types of IRS Form 433

Form 433-A is only one of a few different iterations of this form. They’re all fairly similar, but here are others to know:

• Form 433-A (OIC), This is very similar to the standard Form 433-A, but it’s not quite as long and is specifically used for OIC requests.
• Form 433-B, Collection Information Statement for Businesses: This is the form you’ll use when requesting relief on behalf of a business instead of an individual. This version of the form asks for pretty much the same information as Form 433-A but for your business.
• Form 433-F, Collection Information Statement: You may use this form if you’re applying for certain types of payment plans in lieu of 433-A.
• Form 433-H, Installment Agreement Request and Collection Information Statement: This form is used in some cases when a taxpayer is requesting an installment agreement and the tax liability is more than $50,000 or can’t be paid off within 72 months.

These forms are all similar, but different situations warrant different versions. If you’re unsure which form to use and the IRS hasn’t specified, ask a tax professional for guidance.

How to Complete Form 433-A

Now, when you’re ready to get started on your information collection form, you may be overwhelmed with Form 433-A instructions and fields to complete. This step-by-step guide walks you through each section:

Section 1: Personal Information

You start the form simply by providing your general info, including your name (and spouse’s name if applicable), household information, address and phone number, business name if applicable, marital status, and Social Security number or ITIN.

Section 2: Employment Information for Wage Earners

If you’re a wage earner, you’ll fill out this section with details about your employer and that of your spouse. Provide the employer’s contact information, how long you’ve been there, your occupation, and how often you get paid.

Section 3: Other Financial Information

In this section, you have to indicate if you’re part of a lawsuit, whether you’ve ever filed bankruptcy, if you’ve lived outside the U.S. for six months or longer, if you’re the beneficiary of a trust or estate or life insurance policy, if you have a safe deposit box, and whether you’ve transferred over $10,000 in assets in the last 10 years.

Section 4: Personal Asset Information

This section is where you’ll indicate the assets you currently have, including cash, bank accounts, investments, digital assets, available credit, life insurance, real property, vehicles, and other personal assets, such as jewelry, copyrights, furniture, and the like.

Section 5: Monthly Income and Expenses

Next up is providing your monthly budget details. Outline all forms of income you bring in each month, including wages, investment income, child support, Social Security, and such. Then, provide your living expenses, including necessities like food, clothing, and housing, public transportation, vehicles, healthcare, insurance, taxes, debts, and other expenses.

Section 6: Business Information

Only complete this section if you’re self-employed. Include basic details about your business, including contact information, and how many employees you have, if any, along with monthly payroll costs. Next, enter details about the payment processing system you use, credit cards you accept, business bank account information, accounts receivable information, including grants and contracts, and then your business assets — property, equipment, inventory, and the like.

Section 7: Sole Proprietorship Information

Again, only complete this section if you’re self-employed. Here, provide the accounting method you use for your business (cash or accrual), and your monthly business income and expenses. Income includes line items like gross receipts, investment income, and cash receipts. Monthly business expenses include equipment or materials purchased, salaries, rent, utilities, and others.

Options for Tax Debt Resolution

Dealing with a tax liability, however large, can be stressful, especially if you’re dealing with a financial hardship. Luckily, you have a few other options to get assistance with your tax debt.

Installment Agreement

One of the most common tax relief options is applying for a payment plan, also known as an installment agreement. You can sometimes apply for these and be approved online in just a few steps. However, if you owe a lot of money to the IRS, you may need to use Form 433-A.

An installment agreement allows you to make monthly payments to pay off your tax debt over a set period of time. This can provide some relief if you can’t pay off the balance in a lump sum but you can afford a low monthly payment.

Partial Payment Installment Agreement

As the name implies, a PPIA is a type of installment agreement, and because it’s based on your ability to pay, you will need to complete a collection information statement like the 433-A. With this plan, however, the IRS agrees for you to make your monthly payments in the agreed-upon time period, and after that period ends, the remaining balance doesn’t have to be paid off. This is a good option if you can’t afford to pay your full tax balance but don’t qualify for an OIC.

Offer in Compromise

An offer is where you settle your tax debt for less than the amount owed. You will complete a more detailed version of the 433-A, designed specifically for this program. The objective is to show the IRS that you are making the largest offer possible, based on your disposable income and the quick equity in your assets. The IRS looks at the real value of cash equivalent assets, but typically only takes into account about 80% of the equity of other assets.

Currently Not Collectible Status

CNC status is when the IRS reviews your financial situation and agrees to put a temporary hold on your account. They won’t try to collect from you while this hold is in place. However, the IRS will typically remove CNC status once your finances improve, so remember that it’s only a temporary pause on collections. 

It’s possible that your account will stay in this status for the full statute of limitations for collections, which is 10 years. If this happens, the IRS can no longer collect what you owe once that period expires. There is no set application but be prepared to file a collection information statement or show other proof of financial hardship.

Penalty Abatement

Sometimes it’s the growing penalty and interest balance that’s giving you the most trouble. You may qualify for penalty abatement, where the IRS agrees to waive a penalty from your account. A common type is first-time penalty abatement. This could apply if you have an otherwise good tax compliance history over the last three years.

Spousal Tax Relief

The IRS also offers spousal relief in some cases. If your spouse misrepresented the taxes due on your joint tax return, for instance, you may be able to remove yourself from that liability if certain conditions are met. This is called innocent spouse relief.

Work with a Tax Expert to Complete Form 433-A

Dealing with the IRS in any shape or form can be confusing, overwhelming, and just plain stressful. When you’re unable to pay off your full tax balance, you may be wondering if you have options. Using Form 433-A to submit your financial information is an important step when requesting tax relief.

There are many nuances to completing the 433-A, as everyone’s finances are a little different. Doing it correctly and in a way to present your finances in the best possible light is something that takes a lot of skill and experience. The team at McLaud Law P.C. is here to help you. We can help prepare your 433-A for you and represent you in seeking the resolution of your choice with the IRS.

We can also help with tax debt issues, tax audits, IRS liens and levies, unfiled tax returns, tax court litigation, and much more.

Set up a consultation with McLaud Law P.C. to get started, or call us at 585-397-7785.

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