IRS Form 433-A Breakdown
IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals is used to collect financial information about the taxpayer and the taxpayer’s ability to repay a current tax liability.
Major Sections of the IRS Form 433-A:
- Section 1: Personal Information
- Section 2: Employment Information for Wage Earners
- Section 3: Other Financial Information
- Section 4: Personal Asset Information for All Individuals
- Section 5: Monthly Income and Expenses
- Section 6: Business Information
- Section 7: Sole Proprietorship Information
Section one of the IRS Form 433-A requests general information specific to the taxpayer. Request for information includes full name, marital status, address, and phone numbers.
Section two also requests general information with regard to the taxpayer’s employment status. In this section, the taxpayer will be asked about how many withholding allowances claimed on Form W-4, pay period, and occupation.
Questions located in section three of the IRS Form 433-A center on other types of non-wage earning information. For example, a taxpayer will be expected to disclose information about current lawsuits; bankruptcy filings; foreign residency status; beneficiary of trust, estate, or life insurance policy, safe deposit boxes and recent asset transfers.
In section four, taxpayers must disclose information with regard to current cash on hand in terms of personal bank accounts; investments; available credit on bank issued credit cards; real property; personal vehicles leased and/or purchased, personal assets and total equity.
In section five, the taxpayer must disclose wages, salaries, pensions, and social security; net income from business; net rental income; other income (i.e., unemployment compensation, gambling income, oil credits, and subsidies); expenses not generally allowed specific to private school and public/private college expenses, charitable contributions, voluntary retirement contributions, or payments on unsecured debts; food, clothing, and miscellaneous expenses; housing and utilities; vehicle ownership costs; vehicle operating costs; public transportation, out of pocket health care costs and current year taxes.
Sections six and seven are to be completed by taxpayers who are self-employed. In section six, taxpayers must disclose their type of business, payment processing tools, credit cards accepted by the business, business bank accounts, accounts/notes receivables and business assets.
Section seven requests information about the current accounting method used, total monthly business income and total monthly business expenses. Taxpayers must know their company’s net business income.
Filling out forms for the IRS is nobody’s idea of a good time, but “no pain … no gain … “ Look at it this way. It is your money, your business, possibly even your home, that is on the line if you do not square things away with the IRS. We have mentioned this several times — the IRS does not like to be kept waiting for its money. But if you do not have it, you do not have it.
If you go to the time and effort to complete the forms and gather all of the evidence to support your claim, that is one major threshold you have crossed. A little tip that I give to my clients is to present your forms and documentation in a neat, organized manner, like in a three-ring binder with tabs. Use whatever format works for you, but just make it easy for the IRS examiner to read through.
By going the extra mile, you are demonstrating to the IRS that you are very serious about your tax debt and making a good faith effort to repay it. I also advise my clients to get on the good side of any IRS representative that they deal with. While that may not make you debt, interest and penalties magically go away, if you show respect and are easy to work with, the chances of a favorable response to your application will increase.
Why? People like to work with people that they have formed a positive opinion of. It is human nature.
If you are still stymied by the IRS installment agreement application process, reach out to me. I have encountered every form the IRS has thrown out there, especially those that deal with repayment plans. In all likelihood, there are easy answers to your questions and I can help you sift through the “IRS-ese.”