IRS Form 433-A: Instructions & Purpose of this Information Statement

The IRS may ask you to complete Form 433-A before approving your request for certain types of payment plans and/or settlements. This very detailed form digs into multiple aspects of your finances, and the IRS uses this information to assess your eligibility for tax relief and to analyze your ability to pay.

If the 433-A shows that you have plenty of resources to pay your tax bill in full, the IRS will likely reject your request for payments or settlements, but if the form shows that you really are paying as much as possible, the agency is likely to approve your request. 

This form may feel invasive or confusing, but it can be required in certain situations. Lately, however, the IRS seems to prefer Form 433-F which is a bit shorter but serves the same section. Check out the guide to Form 433-F if you're interested in learning about that form instead. 

The following sections outline how to complete this form and when you may need to complete it. To get help now, use TaxCure to find an experienced tax pro in your area. 

Table of Contents

• What is IRS Form 433-A?
• How to Complete Form 433-A
  • Section 1 - Personal Information
  • Section 2 - Employment Information
  • Section 3 - Other Financial Information
  • Section 4 - Personal Asset Information for All Individuals
  • Section 5 - Income and Expenses
  • Sections 6 and 7 - Business and Sole Proprietorship Information
  • Documents Required to Attach
• Where to File Form 433-A
• How to Apply for an IRS Offer in Compromise
• Other 433 Forms
• Help With the IRS Form 433-A

What is Form 433-A?

Form 433-A is a collection information statement. When you owe back taxes and request certain payment plans or relief options, the IRS may require you to complete this form. 

How to Fill Out Form 433-A

You must complete the first four sections of Form 433-A, whether you are traditionally employed or self-employed. If you owe the tax jointly with your spouse, both of you must complete the form. Remember to complete it accurately. Hiding information from the IRS to avoid paying your tax bill is a form of tax evasion that may lead to criminal charges.

Section 1: Personal Information

Section 1 requires you to provide personal information such as address, social security number, date of birth, and driver’s license number. This information advises the IRS of essential contact and identifying information.

Section 2: Employment Information

Section 2 asks for employment information about yourself and your spouse if applicable. This information allows the IRS to assess your current household income.

Section 3: Other Financial Information

Section 3 requires that you provide other financial information, including supporting documents where requested. For instance, Section 3 asks if you are a party to a lawsuit, if you have a safe deposit box, and if you are the beneficiary of a trust, estate, or life insurance policy. This section also asks if you have transferred any assets in the last 10 years.

The purpose of Section 3 is to help the IRS find out whether you have any source of assets or future income with which to pay the outstanding taxes owed. However, the reason the IRS asks about assets that have been transferred is to ensure that you did not transfer any assets to avoid paying your taxes. For example, if you put assets in other people's names but you continue to use them, the IRS may want more information about the situation.

Section 4: Personal Asset Information for All Individuals

Section 4 requires you to provide the IRS with detailed information about any personal assets, such as vehicles, real estate, bank accounts, investments, and crypto assets. The IRS wants a lot of details about these assets including types of accounts, bank names, and account numbers. For assets with loans such as your home and vehicles, you must put the date you bought the asset, how much you owe, the name of the lender, and the monthly payment. You also must include all of your open credit cards and lines of credit. 

Section 5: Income and Expenses

The IRS uses this section to assess your disposable income and to ensure that you are not avoiding your tax bill due to what the IRS considers to be overspending. In Section 5, you will note all of your income sources including the wages noted in Section 2, rental income, business income, pensions, Social Security, and any other income sources. Note that if you have business income, you will need to complete Sections 6 and 7 as explained below, but in some cases, you may need to complete Form 433-B instead. Then, you will bring the final numbers over to this section of the 433-A. 

You will also note all of your expenses in this section including rent or mortgage payments, utilities, health insurance premiums, childcare expenses, current years' taxes, food, clothing, and other misc expenses. You should also note vehicle ownership costs (aka monthly lease or loan payment) and vehicle operating costs (aka insurance, fuel, repairs, etc). You also must put the total for all your secured debt payments--that includes any debt payments that are tied to property, not unsecured payments such as student loans or credit cards. 

Note that next to the expense column, there is a column called "allowable expenses" and it's for IRS use only. Although you don't have to fill out this section, it affects you, and arguably, it's one of the most important parts of this form. When the IRS is reviewing your form, the revenue officer will compare your actual expenses to the IRS's allowed amounts. The IRS's "allowed amounts" are essentially what the agency thinks you should be spending, and if you are spending over that amount, the agency will generally want you to explain why or cut expenses so that you can devote more money to your tax bill. 

The allowed amounts are also referred to as financial collection standards, and the IRS updates the numbers annually. The numbers for food, clothing, out-of-pocket medical, and monthly car payments are set on the national level. Whether you live in rural Alabama or the middle of New York City, the IRS assumes that your grocery bill will be about the same. The numbers for housing including utilities and vehicle ownership costs are set on the local level, and they vary from county to county throughout the country. 

Before submitting your form, you should look at the standards and ensure that you're spending is relatively in line with the IRS's expectations. A tax professional who specializes in tax resolution can help you understand what to expect.

Sections 6 and 7: Business and Sole Proprietorship Information

You only need to complete these sections if you are self-employed and even then only if you're a sole proprietor who reports their income on Schedule C. If you have a partnership, LLC that's elected to be taxed as an S-corp, or a C-corporation, you will generally fill out Form 433-B instead of these sections. 

In Section 6, you note the business name, type of business, EIN, and whether or not you're a federal contractor. You should also note your number of employees, average monthly payroll, and your payroll deposit schedule. Then, note if you are involved in internet (e-commerce) sales. Next, list information about your payment processor and the types of credit cards you accept at your business. You also must list your business bank accounts with their balances, your accounts receivables, and all of your business assets along with their fair market value, loans owed, and monthly payments. 

In Section 7, you will note your business income and expenses. These numbers should match the profit and loss report that you will provide from your business. You can also use the info from your Schedule C, but if you do so, you must eliminate duplicate expenses. For example, if you claim a deduction for your home office but you've already included all of your housing expenses in Section 5 of this form, you should add those amounts back to the profit shown on your Schedule C.

Required Attachments

When you submit this form, you should also include documents related to the last three months of your income, expenses, and assets. For example, this typically includes paystubs, mortgage statements, utility bills, and bank statements. Essentially, any number that you put on this form should be backed up by a related document. The IRS will let you know if you need to share additional documents after you send in the form.

When to File IRS Form 433-A

Generally, you will never just decide to file this form. Instead, you will file it when an IRS revenue officer requests that you do so. The agency may request this form from taxpayers who meet the following criteria:

• Owe individual income tax from Form 1040
• Have personal liability for a partnership tax
• Have personal liability for the Trust Fund Recovery Penalty
• Individuals who are self-employed or the individual owner of an LLC that is a disregarded entity in relation to a variety of different taxes.

Here are some of the main situations where you may need to complete this form, but keep in mind, that the agency may alternatively request a 433-F instead.

Installment Agreements - If you owe more than $50,000, can't afford to pay off the tax debt within six years, or have a history of defaulting on payment plans, you may need to complete Form 433-A to get approved for a monthly payment plan on your back taxes. If you owe less than $50,000, can pay off the balance within six years, and do not have a history of default, you can usually just set up a payment plan online easily without filling out a collection information statement. 

Partial Payment Installment Agreement - With this type of payment plan, you make monthly payments until about 10 years after the return due date (possibly slightly longer in some cases), and then, at the end of the payment period, the IRS writes off the rest of the debt. To get approved for this type of deal, you must complete a 433-A or a similar form as requested. 

Hardship - If you cannot afford to pay, the IRS may agree to give you a temporary break from collection actions. To get relief, you must contact the IRS directly and prove that you cannot pay by filing a 433-A or a similar form or by meeting specific requirements such as having disability payments as your only source of income. Once you're approved, the IRS will stop all collection actions until your financial situation improves. 

How to Apply for an Offer in Compromise

An Offer in Compromise is when the IRS lets you pay off your tax bill for less than you owe, and to get approved, you will need to complete a financial statement. However, instead of using Form 433-A, you will use Form 433-A (OIC). This version of the form is very similar, but it asks for a few more details. 

Under federal law, the IRS has the authority to compromise a tax balance or part of a tax balance in certain situations. The IRS can grant a taxpayer’s request for an offer in compromise by permitting the taxpayer to enter into one of the following payment arrangements:

• a partial lump sum payment, to be paid in five or fewer monthly installment payments
• a short-term periodic payment, to be paid over a period as long as 24 months or by the remaining CSED period, whichever is less

For example, the IRS can compromise an unpaid tax bill if there is doubt as to the collectibility of the entire bill. The IRS also can compromise taxes owed to promote effective tax administration, in that the taxpayer has demonstrated an economic hardship or other special circumstances that render the taxpayer unable to pay the entire bill. If a taxpayer is basing a request for an offer in compromise on one of these reasons, then the IRS requires the taxpayer to complete Form 433-A (OIC) for individuals and 433-B (OIC) for businesses. 

The information provided on this form allows the IRS to make a decision as to the taxpayer’s request for an offer in compromise, and to determine the repayment arrangements available to the taxpayer under an approved offer in compromise.

Other Forms in the 433 Series

In addition to the 433-A, 433-B, 433-A (OIC), Form 433-B (OIC), and Form 433-F listed above, there is also a Form 433-D. All of the other forms are collection information statements which means that you make a statement and the IRS uses the information to identify the best way to collect your taxes. Form 433-D, in contrast, is used when you set up a payment agreement. You sign this form to agree to the terms of your agreement and also to set up direct debit payments from your bank account. 

Getting Help with IRS form 433-A

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