What Is IRS Form 433-A?

When you can’t afford your tax bill, you have options for resolution. You can apply for a payment plan or try to get your debt settled for less than owed. Many different forms can be involved in these processes on top of your normal tax returns.

One form used frequently is Form 433-A, Collection Information Statement. This form asks for detailed financial information about you or your business so the IRS can review your situation and approve a resolution option.

This guide walks through who needs to use this form, when to file it, and how to fill it out. If you have questions about IRS Form 433-A, reach out to the team at 20/20 Tax Resolution for expert guidance.

Key Takeaways:

Who? Wage earners or self-employed individuals should use Form 433-A.
What? Form 433-A requests personal and business details about assets, debts, monthly budget, and income.
When? If requesting an offer in compromise, partial payment installment agreement, or certain payment plans.
Why? So, the IRS can decide if you qualify for a settlement or certain payment plans.
How? Contact a tax expert at 20/20 Tax Resolution if you need help with Form 433-A or another IRS tax form.

When Should You File IRS Form 433-A?

Form 433-A is the Collection Information Statement for Wage Earners and Self-Employed Individuals. It’s used when you need to submit information about your financial situation to the IRS. Most commonly, the IRS may ask you to complete this form if you’re requesting a payment plan for over $100,000, a payment plan for longer than six years, or a partial payment installment agreement.

If you’re requesting an offer in compromise (OIC), you will typically file another more detailed version of this form called the 433-A (OIC).

Why do you need to file Form 433-A?

This form asks for detailed information about who you are, your employment details, the assets you currently have, and your monthly budget. It paints a picture for the IRS to figure out exactly what you can afford to pay when you have taxes due but are unable to pay your full balance.

Who Needs to Complete Form 433-A?

The IRS outlines which taxpayers would need to submit IRS Form 433-A, which includes individuals who:

Owe income tax on Form 1040
Are personally responsible for a Trust Fund Recovery Penalty
Are personally responsible for a partnership liability
Own a limited liability company (LLC) that is a disregarded entity
Are self-employed or have self-employment income

Wage earners must fill out Sections 1–5. Self-employed people fill out Sections 1 and 3–7. Note that if you’re a wage earner and have self-employment income, you should complete all sections.

Using Form 433-A (OIC) to Apply for an Offer in Compromise

You’ll commonly use Form 433-A (OIC), to apply for an offer in compromise. This is an arrangement with the IRS where you provide evidence of your financial situation and give an offer for what you can afford to pay — which is less than your full tax balance. If the IRS agrees that it cannot reasonably expect to collect more from you than what you offered, it may accept your offer.

When you’re struggling to afford your tax bill, an OIC can be a good option to settle your debt for less. However, just know that the IRS gets many of these applications and doesn’t approve even half of them – approval estimates are somewhere between 30% and 40% of requests.

Reasonable Collection Potential Explained

The IRS won’t accept OICs unless whatever you offer is at least something called the reasonable collection potential or RCP. But how does the IRS determine what is “reasonable” exactly?

The RCP is the value of what the IRS can get from your property, like bank accounts and real estate, if they seize your assets and garnish your wages.

Basically, if the IRS believes that there’s no way you can pay your full tax bill during the 10 years it has to collect it from you, your offer may be accepted. But if they don’t find this to be the case, they will likely not agree. A tax professional can give you a good idea of whether or not you’re a good candidate for this program, and they can help you maximize all of the possible loopholes to gain approval.

Eligibility Requirements for OICs

OICs aren’t right for all taxpayers. Here’s how to qualify:

You’re updated on all tax return filings and estimated tax payments.
You’re not in an open bankruptcy.
You already have an extension for your current tax return.
If you’re an employer, you made your required tax deposits for the last two and current quarters.

You’ll need to submit a full application that includes your Form 433-A (OIC) or Form 433-B (OIC) for businesses, Form 656, a $205 application fee, and your initial payment.

What’s a Partial Payment Installment Agreement?

IRS Form 433-A is also used for requesting a PPIA. This is a type of installment agreement where you pay relatively low monthly payments, and when the statute of limitations for collections expires, which is 10 years after the assessment, you won’t have to pay the rest of your balance.

The IRS may agree to this option if your financial situation doesn’t allow you to pay the minimum monthly payments on a standard installment agreement. A revenue officer will review your financial details to determine what is reasonable.

To apply, you’ll need to fill out the Installment Agreement Request document, Form 9465, and attach Form 433-A, which outlines your finances. Also, include any information that provides evidence of your claims about your situation. Finally, send in a copy of your tax return with your application.

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Steps to Complete Form 433-A

When you’ve determined you’re eligible for an offer in compromise or PPIA, or the IRS has asked you to provide financial information for another reason, it’s time to fill out the form. Here’s a step-by-step guide to Form 433-A:

Personal Information

First, provide your personal details in Section 1. This includes your name, address, phone number, dependents, marital status, business name and type, Social Security number, and date of birth. Make sure everything you include here is accurate and up to date.

Employment Information for Wage Earners

Section 2 is for wage earners, so complete it if you get income from an employer. Provide details about your employer’s name, address, and phone number, as well as your position there and how long you’ve worked there. You also have to indicate how often you get paid (monthly, weekly, etc.). The form also asks for this information about your spouse if you file jointly.

Personal Asset Information

If you’re filling out Form 433-A as an individual, you will complete Section 4. First, indicate your cash on hand, even if it’s not sitting in a bank. Then, list all of your personal bank accounts, including type, financial institution, account number, and balance.

Next, list your investments, including stocks, bonds, mutual funds, stock options, certificates of deposit, and retirement accounts. You’ll also have to provide where they’re located and the current equity. This section also asks about any digital assets you may have, such as cryptocurrency.

The next sections ask you to list your available credit and limits, life insurance policies, real property and equity, personal vehicles (both leased and purchased), and personal assets, such as any valuable collections, furniture, art, or antiques. Be as specific and accurate as possible when listing your assets in Section 4.

Monthly Budget

Section 5 is where you’ll list your monthly income and expenses. Income includes wages, interest, business income, pensions, social security, child support, and other forms of income. Expenses include costs like housing, food and clothing, vehicles, insurance, child care, and more.

Note that the IRS does not see all expenses as necessary. The agency has strict limits on how much it thinks taxpayers should spend on food, clothing, housing, transportation, medical expenses, and other essentials. If your expenses exceed the national standards, you will either need to convince the IRS that the expense is necessary or find a way to make cuts in some area of the budget.

Business Information

Sections 6 and 7 only need to be filled out if you’re self-employed. Section 5 asks for details about your business, including name, address, EIN, business type, phone number, website, employee count if applicable, monthly payroll, and tax deposit frequency. Also, answer yes or no regarding internet sales.

Then, the form asks you to list your payment processor, such as PayPal, Square, or Google Checkout. Include the name, address, and account number. If you accept credit cards, list those in the next part.

Next is information about the cash you have on hand and all your business bank accounts, including the financial institution information, account number, and balances. Then, list your accounts receivable, status, due dates, and amounts due. This provides a picture of your outstanding balance.

Finally, list your business assets. Form 433-A instructions say to include equipment, inventory, tools, books, machinery, and other items used in your business. You’ll need to list each and include fair market value and equity information.

Sole Proprietorship Information

The last section of the form, Section 7, asks about your sole proprietorship financial information. Indicate whether you use the cash or accrual accounting method, then include monthly business income sources such as gross receipts and rental income. Then, list monthly business expenses such as materials, inventory, rent, supplies, and utilities.

Signature

The signature field is on page 4 of the form, not at the end, and all taxpayers completing Form 433-A need to sign and date it, whether a wage earner or self-employed individual. If you file jointly, your spouse also needs to sign.

Offer in Compromise Information

If you’re requesting an OIC and are using Form 433-A (OIC), the sections look a bit different than on the standard Form 433-A but basically request the same financial information. Section 8 of that form is where you calculate your minimum offer amount. The instructions advise you to consider the length of time you need to pay your offer amount — a shorter period will result in a lower minimum offer amount.

Follow all instructions in this section to calculate your offer. You can’t leave this section blank, and it has to be more than $0.

Mailing in Your Form

Where you send your form will depend on where you live and what kind of request you’re making. Sometimes, you may be submitting Form 433-A to answer an IRS notice or request, so follow the instructions you received from them. Submit any other forms required for your request along with Form 433-A, as applicable. If you’re unsure of where to send Form 433-A, reach out to a tax pro or contact the IRS directly.

Form 433-A vs. Form 433-F: What’s the Difference?

Form 433-F is another common IRS form related to information collection. But it’s shorter, with only two pages to fill out, while Form 433-A is six pages.

Form 433-F is used when you’re going through financial hardship, and the IRS is considering putting your account in currently not collectible (CNC) status or when the agency is figuring out what your monthly payment should be for an installment agreement.

Need Help with Form 433-A?

Dealing with any kind of request that requires a collection information statement can be overwhelming. It’s important to understand what you’ll need to provide to the IRS for consideration using IRS Form 433-A.

You don’t have to deal with offer in compromise or PPIA requests on your own. In fact, the process is much easier when you work with a tax professional. An expert can help you understand tax laws, negotiate with the IRS, set up a relief plan that works for you, and navigate complex regulations.

Talk to the team at 20/20 Tax Resolution when you need help with Form 433-A or responding to an IRS notice. Remember that it’s best to act quickly, no matter what tax situation you’re dealing with. To get help now, contact us today to set up a consultation.

Your Guide to IRS Form 433-A