IRS Form 433-A: Guide to Qualifying for IRS Relief

If you’re requesting certain forms of tax relief from the IRS, they may want to verify your financial information. Depending on the type of relief you are asking for, they either want to see if you are able to make the monthly payments you’re requesting or if you have enough financial need for the assistance you are asking for. To determine this, the IRS will ask you to complete Form 433-A.

Accuracy and thoroughness are key as you work through Form 433-A – the IRS will check your supporting documents in great detail to ensure that you have disclosed everything. Learn more about this form, how to fill it out, and when it may be applicable to your case. To get help now, contact us at the Timothy S. Hart Law Firm today.

Key Takeaways

• Form 433-A may be used for installment agreements for debts over $50,000, partial payment installment agreements, and currently not collectible status.
• This form looks at your income, debts, assets, and monthly expenses in great detail.
• After processing your form, the IRS may approve your request for relief, ask for more information, or deny your request.

What is Form 433-A?

IRS Form 433-A is called the Collection Information Statement for Wage Earners and Self-Employed Individuals. It’s an in-depth analysis of a taxpayer who is requesting an installment agreement, partial payment installment agreement, or currently not collectible status.

Form 433-A allows the IRS to determine whether or not you qualify for the form of relief you are asking for. If you have a sizable amount of debt and you’re requesting an installment agreement, the IRS is looking for proof that you are able to make monthly payments without struggling, but at the same time, the agency is also making sure that you don’t have the resources to pay in full.

If you’re requesting currently not collectible status or a partial payment installment agreement, the IRS wants to see if you have exhausted all potential payment options before going this route.

To put it simply, the IRS looks at the info on this form to determine:

• Can you afford to pay in full?
• Are you paying as much as you can afford?
• Are you struggling financially and should you get special relief on your tax debt?

Important Information Included on This Form

This is one of the most in-depth forms taxpayers are responsible for, so plan on spending a fair amount of time on it. The form breaks down essentially every aspect of your finances, including your employment information, income sources, assets and equity, debts, and financial obligations.

The IRS looks at the monthly obligations you have, your income, and the equity you have in your current assets to determine if you have enough money left over each month to pay your taxes. They also look for any substantial equity you can use to pay off your tax debt.

The Role of This Form in Resolving Tax Debt

The IRS requests Form 433-A for a variety of tax situations:

• You want an installment agreement for tax debt of more than $50,000. Monthly payments for an installment agreement of this size are over $700, so the IRS must first verify that you can afford this monthly obligation.
• You owe less than $50,000 but need more than 72 months to pay the tax debt.
• You want to make partial payments via a partial payment installment agreement. If you can pay something toward your tax debt every month but not the full minimum amount, you may request a PPIA. The IRS only grants this option to those who demonstrate financial need.
• You want to request currently not collectible status. The IRS can put a temporary stop to collection activities by placing a taxpayer in currently not collectible status. Before they do so, they must verify that you truly cannot make any payments toward your tax debt.

Depending on the situation, the IRS may request Form 433-F instead of Form 433-A, and in other cases, they may request both 433-A and 433-B. The following section explores these various forms.

Form 433-A and Other Important Tax Relief Forms

Form 433-A is similar to several other tax forms. While these forms may overlap in several ways, they all have their own purpose. You should ensure that you are filling out the correct form(s) before you put hours into compiling your financial information and records. Let’s take a look at the details:

• Form 433-B – Form 433-B is used for the same general purpose as Form 433-A—however, it is required for businesses requesting relief, not individuals.
• Form 433-F – This form is somewhat similar to 433-A, but it is much shorter and simpler. The IRS uses this form to get a general understanding and overview of your financial situation without requiring an entire breakdown of your finances. Often, if you’re requesting an installment agreement, the IRS will ask for this form instead of the 433-A.
• Form 433-A (OIC) – Form 433-A (OIC) is nearly identical to Form 433-A, but it has one additional section: a section to calculate the minimum offer amount for an offer in compromise. This form is only used for taxpayers requesting an offer in compromise.
• Form 433-B (OIC) – Form 433-B is for businesses that are applying for an offer in compromise.

There’s also a Form 433-D, but unlike the above forms, it’s not a collection information statement. Instead, it’s used for setting up direct debits when you’re on an installment agreement.

How to Fill Out Form 433-A

Before you begin filling out Form 433-A, you should review it thoroughly and make sure you have the necessary documentation. The IRS is extremely thorough when analyzing a taxpayer’s finances, and you can save yourself time by having everything ready to go.

Having this documentation on hand can speed up the process of filling out Form 433-A:

• Paystubs and previous tax returns
• List of household bills
• List of debts, monthly payment amounts, interest rates, and date on which the debt is set to be paid off
• List of lines of credit, including the credit limit and the amount of credit available for each line
• List of assets, along with information on any debt they secure and their current value
• List of bank accounts and most recent statements
• All financial documents for your business if you are self-employed
• List of other expenses for your household, including food, housekeeping supplies, apparel, and personal care products

The process of filling out this form is fairly straightforward once you have the necessary documentation set aside. Everyone should fill out sections one through five. If you are self-employed, you will also fill out sections six and seven.

Pay special attention to section five and the area listing your living expenses. The IRS allows you to exempt some of your spending from your payment calculations, based on your family size and where you live. However, if you’re monthly spending exceeds the IRS’s financial standards, they will not include the expense when determining if you qualify for relief.

For instance, if the IRS’s financial standards for housing (rent or mortgage, utilities, and property tax) in your area is $2000 per month and you spend $2500, the IRS will consider the additional $500 as unnecessary.

After filling out the form, sign and date the bottom of page four. Your spouse will also need to sign if you are married.

Common Mistakes and How to Avoid Them

These mistakes can delay the processing of your form or even lead to a denial of your relief request:

• Excluding income sources or failing to account for income accurately. Inaccurate income reports can lead to the IRS making a decision based on false information. Include all income sources, even if they make up a relatively small part of your household income.
• Forgetting assets or inaccurate equity calculations. The amount of equity you have in your assets may play a significant role in whether or not you qualify for different relief options. Failing to include certain assets or estimating their equity can lead to issues.
• Inaccurate debt and monthly payments. On a similar note, be precise in your debt amounts and payments. Underestimating can make you look like you have more money than you do; overestimating may make it appear that you’re trying to defraud the IRS.
• Overestimating monthly expenses. The IRS only allows you to claim certain expenses. Going above and beyond these limits without providing a valid reason for doing so will likely result in your request being denied or the IRS requesting more information.

Filling out this form inaccurately may be considered tax fraud. For instance, if you hide assets or income so that the IRS will accept lower monthly payments on your tax debt, that is typically considered to be fraudulent.

Your Next Steps

After you have submitted Form 433-A with any other forms requested by the IRS, the IRS will process your request. They strive to process applications as quickly as they can, but the actual wait time depends on which type of relief you’re requesting and how busy the office assigned to your case is.

For example, in regards to a partial payment installment agreement, the IRS generally tries to respond within 30 days. Your actual wait time may be longer or shorter.

The IRS will generally respond with one of three outcomes: they will approve you for the relief you’re requesting, deny your request, or ask you for more information before making their decision.

Handling a Request for More Information or Rejection

Respond as quickly as possible to any requests for more information. It’s important to note that while Form 433-A (OIC) requires that you send in substantial supporting documentation, Form 433-A does not have that requirement. The form states that the IRS will contact you and ask for this documentation if they need it. Waiting too long could lead to rejection of your application.

If your request is denied, you may have the right to appeal the IRS’s decision. Your next steps depend on which form of relief you’ve requested and where you are in the timeline. Generally, though, you only have 30 days to appeal a rejection from the IRS, so move quickly and set up a time to talk to a tax attorney about your next steps.

Frequently Asked Questions

What is Form 433-A used for?

The IRS uses this form to determine if a taxpayer qualifies for certain installment agreements, partial payment installment agreements, or currently not collectible status.

How do I know if I should file 433-A or 433-F?

The request you receive from the IRS should specify which form you need.

What supporting documents are needed for Form 433-A?

You do not have to send in supporting documentation with Form 433-A; the form states that they may request verification after receiving your form.

How long does it take the IRS to process Form 433-A?

While the IRS tries to process requests within 30 days, the actual timeline depends on many factors, including the type of relief you’re requesting and the center processing your claim.

Can I negotiate with the IRS if they reject my request after I submit Form 433-A?

If the IRS denies your request for relief, you can appeal their decision. However, you only have 30 days to do so. There’s generally no leeway with this deadline.

Do You Need a Tax Attorney?

Navigating IRS tax forms and relief options can be incredibly stressful, particularly if you know that levies and liens are waiting for you if you’re unable to resolve your tax concerns.

You can save yourself stress, time, and effort by working with a tax attorney. If at any point during this process, you’re unsure of what you should be doing next, you don’t know what the IRS is asking for on a specific form, or you aren’t sure what relief options are suitable for you, you should reach out to a tax professional for clarification and professional guidance.

If you’re filling out IRS Form 433-A as you try to resolve your tax debt, prioritizing accuracy can help the IRS make a quick and informed decision. If you need more personalized assistance during this process, we can help. Call Timothy S. Hart Law Group or reach out online to set up a consultation.