Two uses of the IRS form 433-A, 433-B or 433-F

June 2, 2016 | Tax Debt

Two uses of the IRS form 433-A, 433-B or 433-F

While involved with an IRS collection case, for matters over $50,000 the IRS will ask for a 433-F form to be completed, which is a financial disclosure of your assets and income, or a form 433-A/B form (a variety of the 433-F form) if an IRS Revenue Officer is assigned to your case. From the clients perspective they often under-estimate the importance of this form, and its proper preparation. I often see even CPA’s not completing the form correctly, so obviously the IRS has not made it easy for the taxpayer who has a tax issue. The main use of the form from the perspective of the IRS is to gather information on assets they can levy and seize, and to compute the monthly income you can pay them. From the clients perspective, it is very important to craft a picture of your assets and income so you form the basis of a payment plan offer to the IRS that is justifiable and that you can maintain without defaulting the payment plan. Therefore, it is critical to complete these forms in your best interests while remaining truthful. Its a skill but the results are worthwhile in resolving your tax debt problem since I often find that as I keep working on the form (in some cases 8-12 hours) I see ways to achieve a result that is very helpful to a clients case.

The IRS Form 433-F is important since when a taxpayer does not pay the back taxes owed, the debt will accrue interest and penalties. The amount owed to the Internal Revenue Service will only increase, until steps are taken to remedy the tax problem. One way to help settle back taxes owed is through the IRS Form 433 payment plan.

IRS Form 433-F gives the IRS information about the income, assets, debts, and obligations of the taxpayer. While it might appear simple, you will notice that it does not provide any final answers but just gathers financial data. We have programs that analyze this data and make sure the end result is favorable to you, and we create a payment plan you can live with. There are three types of Form 433; 433-A, 433-B, and form 433-F. Form 433-A is a lengthy document that goes in-depth into the taxpayers income, assets, debts, and obligations. 433-A requires a lot supporting documents to prove the taxpayers financial situation, and it is cumbersome to fill out. Form 433-B is only for businesses that are experiencing tax problems. Form 433-B will require information on the assets and debts of the company as a whole. Form 433-F is very similar to Form 433-A, but much shorter. It still requires information on the taxpayers’ assets, debts, expenses, and obligations, but is only two pages in length.

Our tax law firm has currently been working on preparing IRS Form 433-F for many of our clients. By using the Collection Information Statement, we are able to create tax payment plans that are affordable to our clients. Form 433-F is broken up into seven sections, and below will explain the information needed to accurately and completely prepare your form:

  1. Section A: Accounts/Lines of credit. In order to request an installment agreement, the form requests information on your bank accounts, investment accounts, and lines of credit. This can include checking, savings accounts, IRAs, 401(k) plans, mutual funds, stocks, bonds and other investments. For each account our firm will need the type of account, the account number, the name and address of the financial institution, and the current balance of the account.
  2. Section B: Real Estate. In this section taxpayers must report home, vacation property, timeshares, vacant land, and any other real estate they own. When adding a record, there must be a property description, the year purchased, and the purchase price of the property. If the taxpayer refinanced, the year and refinance amount must also be reported. The form requires the current value of the home. The balance owed and equity in the property must also be reported.
  3. Section C: Other Assets. This section will list all other assets that you own. For most clients, this section is used to report their car. It can also include boats, other recreational vehicles, life insurance policies, and assets such as art or jewelry. For cars owned, we need to know the year, make, and model. We will need to know the monthly payment for each car, and the date of the final payment, if applicable. We will also need to know the current value of the car, and this is done easily by researching the Kelly Blue Book value of each vehicle. We also need to know the monthly insurance payment, as well as expenses for gas, tolls, repairs and parking.
  4. Section D: Credit Cards. In order to accurately file a for an IRS installment agreement, we also need to have accurate information in any credit cards you have in your name. We need the type, issuer, credit limit, balanced owed, and minimum monthly payments for all credit cards issued.
  5. Section E: Wage Information. It is important when filing Form 433-F to have the most current pay stub for the taxpayer. This paycheck will give our firm accurate information to the taxes withheld each paycheck such as; federal, state, FICA, and Medicare taxes.
  6. Section F: Non-Wage Household Income. All sources of household income must be reported to the IRS. If you receive income outside of a wage, such as alimony, child support, unemployment income, pension income, self-employment income, interest income, or social security income, these amounts must be reported. If non-wage income is not reported, your IRS Form 433-F will not be accurate.
  7. Section G: Monthly Living Expenses. Monthly living expenses include food/personal car, transportation, housing and utilities, medical, and other expenses. Other expenses can include; costs of child care, estimated tax payments, retirement contributions, union dues, delinquent taxes, student loans and court ordered payments.

Each IRS Form 433-F form is unique to each client, so the information listed here should be looked at as a guide. If you are considering applying for an installment agreement, working with an experienced tax attorney will help you be able to get the most affordable monthly payment to the IRS for your individual situation, since while the form on its face looks simple, by knowing how the IRS interprets the information gives us an advantage on negotiating the lowest payment plan possible. This is important since the IRS, is not in the lending business so they tend to overstate ones ability to pay them back quickly. This may seem appealing since it lowers your interest and penalty charges, but it puts you at risk of a default of the payment plan which causes much more hardship than when you began since now they will be quick to seize your assets, including bank accounts, vehicles and retirement monies.

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]