IRS Form 433-A/B is one of the forms necessary to prove a financial hardship with the IRS. Read on to learn more about each section of the form...
How to fill out IRS Form 433-A or IRS form 433-B
IRS Form 433-A, (also known as the “Collection Information Statement for Wage Earners and Self-Employed Individuals,” if you’re an IRS geek) is a document the IRS requires if you to file if you want to prove a financial hardship.
The IRS wants to obtain detailed, current financial information about a you so they make you fill out Form 433-A, 433-A (OIC), Form 433-B (for businesses) or Form 433-B (OIC) depending on the situation. In most cases today, the IRS is requesting Form 433-F rather than the 433-A but each of these forms is trying to gather as much financial information about you as possible. This can either help your situation or hurt it. Filling out these forms properly can be the difference between getting accepted into a hardship program or not.
Completing Form 433-A or 433-B
All individuals must complete the first four sections of Form 433-A. Accurate information Is paramount. If a husband and wife jointly owe the unpaid taxes, both spouses must complete the form.
Section 1: Personal Information
Basic information section. This is pretty self-explanatory. The IRS uses this to identify who you are.
Section 2: Employment Information
Employment information about the taxpayer and his or her spouse. This information allows the IRS to assess an individual’s current household income. Both spouses’ income is taken into account even if the tax debt is for just one of them.
Section 3: Other Financial Information
Individuals must provide other financial information, and include documentation where requested. Is the individual a party to a lawsuit, or if the individual is the beneficiary of a trust, estate, or life insurance policy. The IRS is trying to find out if there is a potential for future income with which to pay the outstanding taxes owed.
Section 4: Personal Asset Information for All Individuals
This is really the meat and potatoes of what this form is all about. You’re giving the IRS all of the information they need to assess your ability to pay. If this is not filled out properly the IRS may not get an accurate assessment of your true financial situation. Personal assets, such as vehicles, real estate, bank accounts, and investments are listed in this section. It requires taxpayers to complete a monthly income and expense statement. The IRS will evaluate your bills to determine what they think you can afford to pay towards your tax liability on a monthly basis. You must certify under the penalties of perjury that the information provided in the form is correct. If the tax is owed jointly, both husband and wife must sign the form.
The IRS won’t just take your word for it. You must provide proof of income and expenses. They may ask you to include paycheck stubs, invoices and other records for self-employed individuals, bank statement, investment account statements, loan account statements, credit card statements, bills documenting monthly living expenses, and a copy of the previous year’s income tax return.
Sections 5 and 6: Business Information and Sole Proprietorship Information
This section is for self employed individuals. It asks for detailed information about the taxpayer’s business, including the balances of business bank accounts, outstanding accounts receivable, and other business assets. Section 6 requires an individual to give an accounting of gross monthly business income and expenses, to illustrate the current financial status of the business and measure of its profits, if any.
What is the 433 used for?
The IRS will require completed 433’s in order to approve the following programs:
Currently Not Collectible
Offer in Compromise
Fresh Start Program
If you need Help with this important IRS form
The 433 is a very important document. If you want to be approved for any of the above programs, then it’s crucial that this form be completed correctly and timely—otherwise your application will fail. Even worse the IRS could determine that you can afford a much higher payment than you can handle.
At Lifeline Tax Solutions we have years of experience with this form and many others. Schedule a consultation for answers to all of your questions.