If you want to set up a payment plan for your business’ back taxes owed, you may need to complete a Form 433-B. This collection information statement helps the IRS determine the business’ payment options when outstanding tax balances are owed.
Have you recently received a Form 433-B from the IRS? Wondering how to complete it? Then, keep reading to learn more about how to fill out this form, what to expect once you do, and when to contact a tax attorney for advice.
Understanding Form 433-B and Why You Received It
Form 433-B is a collection information statement that a business owner must complete to disclose the business’ overall financial picture to the IRS. This Form reports your business’ assets, income, and expenses. The IRS uses this information to determine the business’ ability to pay its outstanding back taxes owed and potential payment arrangement options.
Typically, a 433-B Form will be required by a Revenue Officer or IRS Collections before a business can establish any sort of payment arrangement. You will complete a 433-B if your business is a partnership, S corporation, C corporation, or exempt organization. Self-employed individuals and sole proprietors complete different IRS forms. Check out the section below for more information about IRS forms similar to 433-B.
Once the IRS reviews the completed 433-B, it will determine if the business has enough asset equity to pay the outstanding tax in full. If the IRS makes this determination, it will unlikely agree to an installment agreement. However, if the business is unable to pay the balance in full, the IRS will use the 433-B to determine the business’ net monthly income to establish a monthly payment plan. If the 433-B shows the business is suffering from financial hardship, meaning no available asset equity and is generating no monthly income, the business can potentially qualify to be placed in a currently not collectible status. Currently, not collectible means the business will not be required to pay anything to the IRS as long as it remains in that status.
Your Guide to Filling Out IRS Form 433-B
When completing your 433-B form, take extra time to ensure that everything is as accurate and detailed as possible. The IRS will also require that you provide documentation to support the business’ financial numbers reported on Form 433-B.
You can obtain the Form 433-B either in the mail from the IRS or onthe IRS website. Here is a step-by-step overview of how to complete it.
Section One: Details About Your Business
Under Section One, you will provide identifying information about your business, such as:
- The business’ name,
- The business’ street and mailing addresses,
- The business’ telephone number,
- The business’ website,
- The nature of the business,
- The business’ EIN (employer identification number),
- Thetype of business entity,
- When the business was founded,
- How many employees the business has,
- The business’ monthly gross payroll,
- The frequency of tax deposits,
- Whether the business is enrolled in the Electronic Federal Tax Payment System (EFTPS),
- Whether the business engages in e-commerce sales.
The final part to complete under Section One of the 433-B is to input the name, address, and account number for any payment processors used by the business and to provide information on the types of credit cards accepted by the company, along with the merchant account number and associated issuing bank.
Section Two: Contact Information
In the next section, you will be expected to list all personal information for any Partners, Officers, LLC members, and/or Major Shareholders associated with the business. You will need to provide detailed data like:
- Full name
- Title with the business
- Address
- Phone number
- Taxpayer identification number (social security number)
- Annual salary or draw amount
In addition, you will need to specifically note whether each party is responsible for making payroll deposits.
Section Three: Other Financial Information
In Section Three, you will provide more information about the financial aspects of your business. You will need to indicate if your business uses a payroll service provider or Reporting Agent, if the business is a party in ongoing litigation, if the business ever filed for bankruptcy, and if anyone associated with the business listed in Section Twohas outstanding amounts owed to the business, such as a loan.
Further in this Section, the IRS will want to know if your business has transferred any assets in the last ten years for less than the asset’s full value. They will want to know if your business has any other business affiliations, such as a subsidiary or parent company, and they’ll want to know if you expect to experience any significant increase or decrease in your business income in the near future.
Section Four: Assets and Liabilities
Under Section Four of Form 433-B, the business will list its assets and liabilities. This will include detailing the following information for the business:
- Amount of any cash on hand
- Contents of any safe deposit box on the business premises
- Business bank account information
- Type of account
- Address
- Account number
- Balance currently in the account
- Accounts/notes receivable
- Name & Address
- Status (age, factored, other)
- Due date
- Invoice, Government Grant, or Contract number
- Amount anticipated to be received
- Investment Accounts
- Available credit (lines of credit and credit cards)
- Information on real property owned by the business
- Information on vehicles owned by the business
- Information on business equipment and intangible assets, such as purchase date, current loan balance, and any available equity
- Information on business liabilities (such as notes, judgments, secured/unsecured loans, balance owed, date pledged for final payment, and monthly payment amount)
Section Five: Monthly Income and Expenses Statement for Business
Section Five is the final section of Form 433-B, where you will indicate if the business uses a cash or accrual accounting method. You will then need to detail your business’ monthly income and expenses. The business will be expected to use a prior period of 3, 6, 9, or 12 months to report its monthly income and expenses. Once you’ve filled out the entire Form 433-B, you are required to sign and date the Form under Section Five. By signing and dating, you certify under penalties of perjury the information provided on the Form is true, correct, and complete to the best of your knowledge and beliefs.
IRS Notices: 433-B and Other Similar Forms
If you’ve been asked to complete Form 433-B, the IRS assumes your business is not a sole proprietorship. If your business is a sole proprietorship or you are self-employed, the IRS will require that you fill out a Form 433-Ainstead.
If the business qualifies for an offer in compromise, meaning the IRS would agree to settle for an amount less than the tax owed, the business would complete a Form 433-B (OIC) instead. The Form 433-B (OIC) asks for the same financial information as Form 433-B.
Form 433-Fis another similar type of financial tax form, but that is geared toward individual tax matters, where the individual taxpayer will disclose their personal income, assets, and expenses. The IRS requires individual taxpayers to complete this form if they cannot afford the minimum payments on an installment agreement or if they want to set up an installment agreement on a balance over $50,000 owed to the IRS.
You can learn more about forms 433-B, 433-A, 433-F, and othertax relief formsby checking out our guide to the various tax forms you might encounter.
What to Expect After You Submit From 433-B
After you submit your form, the IRS will review all the details you’ve provided. The agency may request additional documentation and information for clarification. Otherwise, they will respond with a proposed payment arrangement or will reject the installment agreement offer and provide you with an alternative.
Do you have more questions? Check out ourfrequently asked questionspage for more details, or call our office at (404) 233-9800 to speak one-on-one with a tax expert.
Is an Installment Agreement My Only Option?
No; never make the mistake of thinking that agreeing to an installment payment plan is your only option when it comes to dealing with IRS business tax debt. An installment agreement is typically one of the best solutions for taxpayers who need more time to pay off what they owe, but it isn’t a one-size-fits-all solution.
Generally, the best way to handle your overdue debt problems is to simply pay off everything you owe, including any fees and compounding interest, in one lump sum payment to the IRS. If that’s not an option for you, then several alternatives exist.
You may or may not be eligible for these options based on your specific circumstances, so if you’re not sure what your best option is, then consider consulting with atax professionalin your local area to get personalized tax advice.
Penalty Abatement
Penalty abatementis the process of having some (or all) of your IRS penalties removed from your total tax debt. Not every taxpayer is eligible for penalty abatement. To qualify, you must show that you are normally compliant with tax deadlines or that you tried to comply with the tax laws but were unable to do so because of circumstances outside of your control.
Offer in Compromise
An Offer in Compromiseallows you to settle for a lower overall amount than what is owedbased on your specific financial circumstances. Generally, your offer must be the most you can afford to pay.However, the IRS may consider an offer in compromise in select situations when the taxpayer can pay off the debt in full, but doing so would cause economic hardship. Every offer in compromise is considered on a case-by-case basis.
Currently Not Collectible
Currently not collectible(CNC) is an IRS status that prevents the tax agency from pursuing collection efforts against you based on your financial situation. CNC means that you simply do not have the assets, income, or ability to earn the income necessary to pay back your tax debt.
If you are unable to pay your debts, you might qualify for CNC status.
You must keep in mind, though, that achieving this status doesn’t clear away your debt. If you later get a better job or your circumstances change, then the IRS will likely re-open your case.
Should You Talk to a Tax Professional?
Have you recently been requested to complete IRS form 433-B? If so, then you might be wondering if it’s worth it to hire an attorneyor whether you should attempt to fill out the form on your own. Only you can decide what’s best in your situation.
Typically, hiring an attorney means that you’re more likely to get a better outcome. The right tax lawyer will know how to fill out Form 433-B in a way that ensures the IRS fully understands your current financial situation, economic obligations, and dependents counting on you.
They’ll help you collect the right documentation and fully inform you about your rights and options. If your attorney thinks an alternative solution might work better, they can help you go over your choices.
Get in Touch With our Tax Lawyers Today
If you completely understand the terms of your potential installment agreement and you’re comfortable filling out your 433-B form on your own, then you’re in a great position to continue negotiating with the IRS over your tax debt. However, running your entire situation by a tax lawyer before submitting your forms might still be in your best interest.
The right tax attorney will be sure to maximize your potential agreement in a way that matches your financial circumstances. A poorly thought-out deal could cause you to later default on the agreement and end up in bad standing with the IRS.
Here at Wiggam Law, our tax specialists include our two founding partners, Jason Wiggam and Judson Mallory, seven highly qualified tax lawyers, paralegals, and several other support staff members. Together, we know exactly what it takes to aggressively negotiate with the IRS and secure a solution that best fits your needs.
Call us at (404) 233-9800 or fill out our online consultation formto schedule a meeting with us today.