Form 433-A & 433-F: How the IRS Decides Your Ability to Pay
December 10, 2019
Tax debt is nothing to brush off, especially when you owe an outrageous amount. If you can’t afford your tax debt, the IRS must decide if – and how – you’ll be able to pay. What does the IRS use to make that decision? You guessed it – tax forms. In this case, the IRS uses forms like Form 433-A or Form 433-F to determine if an agreement is in your future.
How to Start Tackling Your Tax Debt
The first step toward federal tax debt relief is to contact the IRS. This can be as simple as picking up the phone to give them a call, just be prepared for wait times. You can also use a tax debt relief company to contact the IRS on your behalf. Although you can deal with your tax debt on your own, hiring a professional service can help you reach a better resolution quicker, easier, and with less stress.
Whether you go DIY or professional with your tax relief help, the IRS agent who ends up working on your case will determine what the next steps look like for you. While the IRS will need to investigate your payment ability next, how they do that will vary depending on your situation.
What the IRS Considers for Your Payment Ability
To figure out how much you can reasonably pay your owed federal income tax, the IRS must have certain financial information about you. This includes:
- Any assets that you can take a loan against (e.g. house, other property, etc.)
- Any asset such as your car, boat, or house that you can sell to pay the tax debt
- Property that is yours but is held by someone else, including funds in bank accounts, retirement accounts, and trust funds
To gather this information, the IRS will ask you to send them a form, which could be Form 433-A, 433-B, or 433-F.
How Do You Know Which Form to Use?
It’s a headache that the IRS has so many different forms that all seem to serve the same purpose. The good news is that you don’t really need to deduce which form you’ll need. At the end of the day, the IRS will determine the form they require from you.
However, it’s always good to be knowledgeable about the form you’re filling out and why. Let’s look at these three forms and note the differences between them.
IRS Form 433-A is used for both those who are self-employed and those who earn wages. If your IRS case is assigned to a Revenue Officer, they’ll likely require you complete Form 433-A.
You may deal with a Revenue Officer if you have more $250,000 in tax debt owed, you’ve mixed business and personal expenses, or you have payroll tax debt. However, Revenue Officers can still be assigned to cases without any of those characteristics.
Form 433-A is six pages long and requires a good amount of information. The information you’ll need to provide includes:
- Your name, social security number, driver’s license number, and date of birth
- Your employment information
- Any impending lawsuits, trust funds, or life insurance policies
- Any personal assets (e.g., vehicles, bank accounts, real estate)
- Business assets and gross monthly business income or expenses for those who are self-employed
- Paycheck stubs, bank statements, and credit card statements
- Monthly living expenses
Though the IRS has to leave you enough money to live (per the allowable living expenses), the agency will review your specific financial needs for monthly living expenses. There is a place on Form 433-A for you to include necessary total living expenses, including:
- Food, clothing and miscellaneous
- Housing and utilities
- Vehicle ownership and operation
- Public transportation
- Health insurance
- Out-of-pocket health care costs
- Court-ordered payments
- Current year taxes
- Secured debts
- Other expenses, such as student loans, unsecured debts, and tuition fees
Variation with a Purpose: Form 433-A (OIC)
If you’re interested in applying for an Offer in Compromise (OIC), you’ll need to complete Form 433-A (OIC). This form is included in the IRS Form 656 Booklet, which is used to submit a personal Offer in Compromise to the IRS. It requires much of the same detailed information as Form 433-A, but is geared specifically to get information for the IRS to consider an OIC.
If your business owes taxes to the IRS, then you’ll need Form 433-B. Form 433-B is also generally required if your case has been assigned to a Revenue Officer.
Much like Form 433-A, Form 433-B is six pages long and requires detailed accounts of your finances. The business information you’ll need to provide on Form 433-B includes:
- Your business’s name, date of establishment, type, number of employees, internet sales, and contact information
- Key individuals in the business (partners, board members, or major shareholders) and their phone numbers and social security numbers
- Any impending lawsuits, debts owed, or bankruptcy proceedings
- Business bank accounts, available credit, vehicles, total cash in banks, and other assets and liabilities
- Business’s total monthly income and expenses
If you don’t own a business that has federal tax debt, you won’t need to worry about Form 433-B.
Form 433-F is the most commonly seen collection information statement. The IRS usually uses 433-F to determine eligibility for payment plans or Currently Non-Collectible status. If your case is assigned to the IRS Automated Collection Service, you’ll likely be required to fill out Form 433-F.
Form 433-F is a simplified version of Form 433-A, with only two pages. There are fewer questions to answer. The information you’ll need to provide on Form 433-F includes:
- Contact information and social security number
- Bank accounts, lines of credit, and mutual funds
- Real estate and other assets (e.g., cars, boats)
- Credit cards owned and amount owed
- Business information if you own a business
- Employment information and non-wage household total income
- Monthly living expenses
Quick Reference Guide
No matter which form the IRS needs from you, one thing’s for sure: they’ll need some serious documentation to support the financial information you provide. Although there is certain information they can verify internally using your previous tax returns, it’s still in your best interest to have proof of all the financial information you provided. Even if the IRS doesn’t request those documents, you’ll be ahead of the game if you have everything ready to go.
Fresh Start Initiative
Based on your financial statement given through any of the forms above, the IRS determines your ability to pay and decides whether to approve your application for a payment plan or not. Under the Fresh Start Program, the IRS may not ask for a financial statement if you owe $50,000 or less in tax debt and apply for an Installment Agreement. For tax debts that are greater than $50,000, and to request a tax debt reduction, you will need to provide the IRS with one of the financial statements detailed above.
If you’re unsure if you qualify for any IRS debt repayment programs or forgiveness programs, our licensed tax professionals can review your specific situation to see if you qualify. We work with the IRS on your behalf, so you don’t have to navigate the complex tax laws alone.
Don’t go at it alone.
How Much Do I Owe the IRS? 4 Ways to Find Out
July 26, 2019
No one wants to owe the Internal Revenue Service. Ideally, you’d pay the exact right amount of income taxes and be on your way without a second thought. Or maybe you’d just end up with a surprising but welcome tax refund once you file. But that’s not always what happens.
Sometimes, an unexpected amount of back taxes can pile up. You may know you have a federal tax balance but still wonder, “How much do I owe the IRS?” Don’t wait for those scary IRS notices to find out. We can help you figure it out, using one of four easy methods.
1. Use the IRS’s handy online system
Back in Dec. 2016, the IRS released an online tool for taxpayers. This tool acts as a portal for you to view your account with the IRS. You’ll be able to see your payoff amount, the balance for each tax year that you owe, and up to 24 months of payment history. Your account balance will update no more than once every 24 hours and usually overnight. It’s completely free; all you need to do is register to access your account.
However, there are two catches to using this tool.
The first is that you can only access it during certain times.
- Monday 6:00 a.m. to Saturday 9:00 p.m. ET
- Sunday from 10:00 a.m. to midnight ET
The tool occasionally goes offline during additional hours to allow for maintenance.
The second catch is that you must provide specific information to gain access to the tool, including:
- Social security number or Individual Tax Identification Number
- Date of birth
- Filing status
- Mailing address from your last tax return
- An email address
- A mobile phone
- An account number from a financial account, which could be:
- Credit Card
- Student Loan
- Mortgage or Home Equity Loan
- Home Equity Line of Credit
- Auto Loan
This information is meant to verify your identity, but it can be a pain to rustle it all together.
The IRS will also pull a credit report with this information to ensure you are who you say you are. But this is a soft inquiry, so it won’t impact your credit score and lenders won’t be able to see it.
If you decide to register and use the online portal, you can even use it to pay your taxes online. It’ll take one to three weeks for your payments to show up in the Payment History page.
2. Pick up the phone and call the IRS
Not a big fan of using online tools to deal with your federal taxes? Don’t have all the info you need to access the online service? Don’t worry, you’ve got other options.
Your first option is to give the IRS a call. You may have to deal with a wait time, which averages about 27 minutes during post-filing season. But once you’re connected, a representative from the IRS should be able to tell you how much you owe.
Our suggestion: Call as early in the day as possible to prevent longer hold times.
If you’re an individual taxpayer looking into your balance, you can call the IRS at 1-800-829-1040 between 7:00 a.m. and 7 p.m. local time.
Representing a business? Call the IRS at 1-800-829-4933 instead between 7:00 a.m. to 7:00 p.m. local time.
3. Fill out a form and drop it in the mail
Another option outside of the online portal is to contact the IRS by sending a form through snail mail.
While this is a viable option for any taxpayer, keep in mind that it will take much longer due to the nature of mail. And if you do owe, penalties and interest will continue to accrue while you wait for a response.
You’ll also want to make sure the IRS has your current address. If they don’t, they’ll send their response (and any other notices) to the most recent address they have on file, which may not be your current one.
Individual taxpayers who filed a Form 1040, 1040A, or 1040EZ can request an Account Transcript. This transcript will only cover a single tax year and might not include any tax penalties, interest, or additional charges.
If you filed another type of form or are representing a business, you’ll need to submit Form 4506-T, Request for Transcript of Tax Return. Once the IRS receives and processes your 4506-T form, they will send you a free transcript.
4. Consult tax debt relief professionals who can figure it out for you
The last option may be the easiest and most hands-free answer to the question, “How much do I owe the IRS?” No need for an online portal, a phone call, or a form in the mail. Instead, you can have someone do that leg work for you.
Tax debt professionals (like CPAs, tax attorneys, and EAs) can work with the IRS on your behalf to find out exactly how much your tax liability is. All you’ll need to do is give them the information they need and kick back while they deal with the IRS for you. And once they find out how much you owe, they can offer you customized solutions.
What to do if you owe the IRS but can’t pay
Once you figure out how much you owe the IRS, your next step is to figure out what to do about it.
If you have money in your bank account to cover your balance, it’s as easy as just paying that payoff amount to the IRS.
But what do you do if you don’t have the money to pay your taxes owed?
The IRS isn’t blind to this problem. They offer solutions for cases like this, which include an installment agreement and Offer in Compromise. Not everyone qualifies for each solution though, so it’s important to find an available option that can offer you some relief.
If you went with the tax debt relief expert route, they’ll be able to walk you through the options available to you and what they would suggest for your unique situation. Our tax pros will even do the heavy lifting to set up a tax resolution that works for you, whether it be a payment plan or an appeal.
If you need back taxes help, reach out for assistance before the tax debt storm comes your way. Liens and garnishment loom on the horizon until you take action to deal with your tax liability. Remember, our tax professionals are only a phone call away.
Owe the IRS and Can’t Pay? Why You Need Tax Relief Help
May 9, 2019
By now, your taxes have hopefully been filed. You may have come out of 2018 without owing the IRS (or even getting a refund). However, there’s a big chance you instead found yourself with a tax bill you aren’t able to pay. If that’s the case, don’t be too hard on yourself. Many people found themselves in this position due to a withholding mistake (thanks, recent tax reform!) Getting bogged down in frustration and fear of an unmanageable tax bill won’t help now. Instead, read on to determine if tax relief help is your best bet to focus on a brighter tax future.
You don’t have the money to settle your bill and can’t see how you ever will.
You’re feeling hopeless. Maybe your current balance with the IRS is more money than you’ve ever seen in your bank account at any given time. Or perhaps you just mortgaged a house or leased a car, and you’re concerned about what this tax bill could mean for you. Whatever financial pickle you find yourself in, the fact remains: there’s no way you can just make one easy payment to clear up this tax debt.
Tax relief help experts like ours have been around the IRS block and have seen all sorts of financial situations. They’ll take the time to learn everything important about your unique circumstance. Then, they will be able to walk you through your options to find a route out of tax debt that works for you.
You don’t know how to deal with the IRS.
Imagine the headache you’d have if you went to make that dreaded IRS call. You immediately face droning hold music. With every staticky chord, your anticipation gets worse and worse. Even if you get a pleasant IRS rep, you’re still ultimately getting ready to have a conversation with someone whose main goal is to get what you owe the government.
Okay, we’re sorry we asked you to imagine that. Instead, just imagine the headache you wouldn’t have if you had a professional working with the IRS on your behalf.
Experience is key when it comes to IRS dealings and we’ve got plenty of it. Our team has a collective 250 years of experience in tax relief help. We know what questions the IRS will ask before they ask them. And we can help minimize long delays caused by submitting unnecessary information or payment requests that we know they won’t accept. Working with the IRS is our specialty, so it doesn’t have to be yours!
You want to keep the tax relief damage to a minimum.
The worst part about tax debt isn’t the notices that the IRS will send you nonstop or even the anger you might feel for being in this situation. There are far more serious consequences ahead. From levies against your property or wages to penalties and interest that bury you in even more debt, the IRS can be unrelenting when it comes to trying to recoup what they’re due. And trust us, they can take things up a notch if they feel like you’re not paying attention.
The good news is that the sooner you tackle your tax debt, the better. By seeking tax relief help, you’ll ensure that there is a tax pro with experience and passion dedicated to working with the IRS to get you the best possible outcome.
If any of the above applies to you, tax relief help may be right for you – but be wary.
Tax relief help can really change your life. However, you’ll want to be careful. There are tax relief companies out there that will scam you out of your money and leave you in a worse situation.
Make sure any tax debt relief company you decide to work with is transparent. They should be open about their pricing and what you can expect from them. Most honest tax debt relief companies will offer a free consultation to gain a better understanding of your current situation before discussing what relief options are available to you. They won’t promise you solutions like tax debt forgiveness without knowing the full picture. Feel free to ask about their experience and expertise to ensure you’re getting seasoned professionals on your side.
We’ve helped resolve over $18 billion in tax debt in the decade we’ve been in business. Our tax experts have a wide range of professional accreditations and are always ready to provide you with top-rated tax relief help. Contact us for your free initial consultation to take that first step towards freedom from tax debt.