IRS Form 433-A: Your Guide to Financial Information Collection

You don’t necessarily have to satisfy the entire tax liability at once because the IRS offers different tax relief options to taxpayers who owe more tax than they can afford to pay.

Hence, you can consider applying for the currently not collectible status or entering into a partial installment agreement.

To qualify for these tax relief options, you may have to complete IRS Form 433-A, which collects your financial information and helps the IRS whether to approve or reject your application.

This version of Form 433 is aimed at wage earners and self-employed taxpayers who want to pay their debts in installments or postpone paying their tax liability until their financial situation changes.

You’ll have to use other versions of this form if you’re applying for an offer in compromise or seeking tax relief for your business taxes.

In this guide to financial information collection, we’ll show you when to use IRS Form 433-A and how to complete it.

Differentiating Between Different Versions of Form 433

Form 433 has six versions that collect financial information from taxpayers for different purposes. Form 433-A is aimed at self-employed individuals and wage earners who cannot pay their tax debt.

Although they serve the same purpose, Form 433-A is a more detailed version of the two-page-long Form 433-F, and it is commonly used when an IRS officer is assigned to a case. On the other hand, taxpayers applying for an installment agreement are usually required to complete Form 433-F.

You’ll have to use Form 433-A (OIC) if you want to apply for an offer in compromise, while in some cases, you may have to fill out Form 433-D to enter an installment agreement with the IRS.

Form 433-B is a collection statement for businesses, so if your S corporation, LLC, classified as a corporation or partnership, owes taxes, you must complete this form to set up a payment plan or obtain the currently not collectible status.

Determining When to Use Form 433-A

Publication 1854 provides detailed instructions on how to complete IRS Form 433-A. It also indicates which types of taxpayers may have to use the form to submit their financial statements to the IRS.

The document states that the form’s purpose is to obtain the taxpayer’s current financial information so that the IRS can determine whether the taxpayer can satisfy their tax liability.

Submitting Form 433-A is necessary if:

• You’re an individual taxpayer who underpaid income taxes on Form 1040.
• You’re responsible for the trust fund recovery penalty.
• You’re personally liable for the partnership’s tax debt.
• You own an LLC classified as a disregarded entity.
• You’re self-employed or earn self-employment income. Sole proprietors and independent contractors must submit their financial statements to the IRS on Form 433-A.

You won’t have to determine which version of Form 433 you should use for your financial statement because the IRS will inform you which forms they need when you apply for an installment agreement or hardship relief.

That said, Form 433-A is commonly utilized when cases are assigned to an IRS officer. So, unless you owe payroll tax, combined personal and business expenses, or your tax liability is over $250,000, you’ll probably have to submit your financial statement of Form 433-F.

Preparing the Financial Documents for Form 433-A

Besides Form 433-A, your financial statement must include a long list of documents supporting the information you provide.

Depending on the circumstances of your case, you may have to attach the following documents to Form 433-A:

• Form 2048 (only if you want legal representation)
• Copy of the latest paystub
• Copies of bank statements for the last quarter
• Copies of reports for retirement accounts, investments, and all other income sources
• Previous month’s statements from lenders that include the payoff amounts, payments, and balances
• The proof of delinquent local or state taxes (if any)

You’ll also have to complete IRS Form 656 and attach it to Form 433-A (OIC) if you’re applying for an offer in compromise.

Please note that this isn’t an extensive list of documents you may have to attach to Form 433-A, and the IRS might ask you to provide additional files when evaluating your financial situation.

An In-depth Look at IRS Form 433-A

You only have to complete all sections of Form 433-A if you’re a wage earner who also makes self-employment income.

You should fill out sections 1 through 5 if your only income comes from a salary or wage, while self-employed individuals must complete sections 1, 3, 4,5,6, and 7 of this form. In either case, you must sign the form on Page 4.

Let’s go through IRS Form 433-A and examine the information it collects.

Section 1: Personal Information

The first part of the form gathers information about you, your spouse, and the dependents you claim on a tax return. You must declare your marital status, provide your home address, and specify if you or your spouse have a business interest in a partnership, corporation, or LLC.

Section 2: Employment Information for Wage Earners

As its title indicates, Section 2 collects information about your and your spouse’s employers. You’ll have to disclose the names and addresses of companies you and your spouse work for and the duration of your employment.

In addition, this part of the form asks you to specify your occupation, payment frequency, and the number claimed as a dependent on your tax return.

Section 3: Other Financial Information

You’ll have to answer a series of yes or no questions and provide further explanations for each question to complete the form’s Section 3.

These questions refer to your involvement in lawsuits, bankruptcy proceedings, or whether you lived outside of the US for more than six months in the last ten years.

Moreover, the section asks for information about taxpayers who are beneficiaries of trusts, estates, or life insurance policies.

Section 4: Personal Asset Information

You must include information about all personal assets you own in this section.

Remember that the IRS considers omitting assets a financial statement manipulation and might reject your CNC status or installment agreement application if you fail to list all personal assets you have.

The personal asset information includes any cash you don’t keep in a bank, all bank accounts registered in your name, and the balance on each account. Moreover, you’ll have to provide information about the following personal assets:

• Digital currencies
• Investments (stocks, mutual funds, 401K or IRA retirement plans, etc.)
• All available lines of credit
• Life insurance policies with cash values
• Real property
• Leased and purchased vehicles (cars, boats, trailers, RVs, etc.)
• Other personal assets (artwork, collections, furniture, etc.)

Section 5: Monthly Income and Expenses

This section lets you calculate your total monthly income and minimum living expenses. The Income column gathers information about your wages, net business income, distributions, social security benefits, and other income sources.

The Total Living Expenses column lists food, clothing, health insurance, public transportation, costs of owning and operating a vehicle, delinquent local or state taxes, and other allowable expenses.

The IRS commonly disallows expenses for college tuition, charitable contributions, or payment of unsecured loans.

Section 6: Business Information

Self-employed individuals who run companies classified as sole proprietorships or other business entities must complete Sections 6 and 7 of Form 433-A.

Aside from general information about a company, like its website address, name, or EIN, Section 6 also gathers information about credit cards a business accepts and its digital currency assets.

Moreover, you’ll have to declare the value of all the company’s cash, bank account balances, notes receivable, equipment, and other business assets.

Section 7: Sole Proprietorship Information

The form’s final section determines a business’s net income by breaking down its monthly income and expenses. To complete this part, you’ll need receipts, information about dividends, interest, and your business’s other revenue sources.

Current taxes, gross wages, salaries, rent, or materials you purchase to provide a specific service are among the allowable expenses.

Submitting Form 433-A

Read Form 433-A after you fill it out to check if all information is correct and ensure you have all the documents you must attach to the form. Remember to ask your spouse to sign the form if you included their information.

Form 433-A is one of many forms you must submit when applying for a partial installment agreement or CNC status.

Hence, you must call the IRS to ask where to send your collection information statement for wage earners and self-employed individuals if you’re applying for CNC status.

The mailing address for Form 9456 and Form 433-A will depend on where you live, so you should consult with the IRS before you file these tax forms.

The IRS needs approximately thirty days to review your financial statement, assess whether you can satisfy your tax liability, and approve or reject your installment agreement or CNC status request.

Frequently Asked Questions

The Role of IRS Form 433-A in the Tax Relief Process

The information you provide on Form 433-A will play a vital role in the IRS’ decision to approve your CNC status or installment agreement application.

Consequently, your financial statement must show how much you and your spouse earn and which assets you own. The IRS will use this information to assess your financial situation and determine how much of your tax debt you can afford to pay.