February 7, 2023 | Payment Plans
You may need to complete Form 433-B if you’re applying for a payment plan or hardship status for a business. To apply for an offer in compromise for a business, you need to complete Form 433-B (OIC). Both versions of this six-page form request detailed information about your business finances, but the OIC version takes you through calculating a settlement offer on your taxes. This guide explains when businesses need to complete 433-B forms and outlines the instructions for these forms. To get help now, contact us today. At the Timothy S. Hart Law Group, P.C., we have extensive experience helping businesses get the best resolution for their tax issues. Tax relief is a very specific part of the tax code. To get the best results possible, you need to work with an experienced tax attorney who provides individualized attention to your situation.
What Is IRS Form 433-B?Form 433-B is called the Collection Information Statement for Businesses. It is a form that the IRS uses to learn about a business’s income, assets, expenses, and liabilities. The IRS uses this information to determine if businesses qualify for payment plans, hardship status, tax settlements, or other types of tax relief.
When to Complete IRS Form 433-BYou should only file this form for c-corporations, s-corps, partnerships, multi-member LLCs, and single-member LLCs elected to be taxed as s-corps. Sole proprietors should file Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals). Here is a closer look at the situations where businesses should file this form: back taxes, but your business can pay its current and future tax liabilities, the IRS will grant you hardship status. Hardship status doesn’t eliminate your back taxes. It allows you to temporarily delay paying taxes until your financial situation improves.
If you can’t afford the minimum payment on an Installment AgreementThe rules for installment agreements are different for businesses than they are for individuals. If you’re still in business, you can only set up a monthly payment plan if you owe less than $25,000 in tax, interest, and penalties. Otherwise, you can only set up a payment plan if your business is no longer operating. The IRS will determine your minimum monthly payment based on how much you owe and the amount of time the agency is willing to let you make payments. If you cannot afford to make the minimum monthly payment, the IRS will require you to provide more information about your financial situation by filing Form 433-B.
When applying for an offer in compromiseAn offer in compromise is when you settle taxes for less than you owe. To apply for an offer in compromise on business taxes, you must use Form 433-B (OIC). Note that this is a slightly different version of the 433-B form. Again, you should only use Form 433-B (OIC) if your business is taxed as a corporation or a partnership. Sole proprietorships should use Form 433-A. If you’re applying for an offer in compromise on both personal and business taxes (not including sole proprietorships), you will need to complete both forms, and in fact, you may need to request two separate settlements. In limited cases, the IRS may accept an offer in compromise from businesses that are still operating. In this case, you need to make all federal tax deposits for the current quarter and the two proceeding quarters. You cannot apply if your business is in an open bankruptcy case. Generally, the IRS will not approve your offer-in-compromise request if you owe trust fund taxes. However, there is an exception in cases where the IRS has made a trust fund recovery penalty determination against another responsible party and then agrees to settle the remaining tax liability with the business owner. These are the main situations where your business needs to file this form. Still not sure if this is the right form for your needs? Then, contact us directly, and we can help you get clarity about your situation.
How to Fill Out Form 433-BYou will need very detailed information about your business to complete this form. Here is an overview. Note that these instructions focus on the standard version of this form.
Business Information and ContactsThe first two sections of this form request very straightforward details about your business, including its name, address, type of entity, and date of establishment or incorporation. You also need the following:
- Number of employees
- Gross monthly payroll
- Frequency of tax deposits
- Whether or not you’re enrolled in the EFTPS
- Payment processor account numbers and/or virtual currency wallet information for e-commerce businesses
- Credit cards accepted and merchant account numbers
Other Financial Information About Your BusinessSection three asks you questions about your business’s financial information. To complete this form accurately, gather details to answer the following questions:
- Do you use a payroll service provider? If so, note their details.
- Are you party to a lawsuit? If so, you need the docket number, the amount of the suit, and the possible completion date.
- Has the business ever filed for bankruptcy? If yes, the date filed, dismissed, and discharged, plus the petition number.
- Do any officers, partners, employees, or other related parties owe money to the business? If yes, note the details of the loans.
- Has the business transferred any assets in the last ten years for less than their full fair market value? Then, note the details of the transfer, including the recipient, the date, and the value of the assets.
- Does the business have a subsidiary or parent company? Note their details if you do.
- Is the business a federal contractor? If so, you need to note the amounts owed by the government in the following section when you detail your accounts receivables.
- Do you anticipate an increase or decrease in the business’s income? If so, you need to provide a written explanation.