Introduction to the IRS Form 433-A
What is it used for?
Form 433-A is used to obtain financial information for an individual who is a wage earner or self-employed individual. It decides whether a specified individual can satisfy an outstanding tax liability. If there is funds left over after taking into account income and expenses, an installment agreement will normally result. If the form shows that there is $0 or negative income, a taxpayer will most likely qualify for currently non-collectible status.
What does it mean to be self-employed?
You are self-employed if you are in business for yourself or carry on a trade or business as a sole proprietor or independent contractor. If you run 1099 income through your social security number, have a dba, or a Limited Liability Company that has not made an S-Corporation election, you are self-employed.
What specific information does it account for?
It takes into account personal asset information as well as your monthly income and expenses. Personal assets are any items that can be converted into cash if needed such as cash in your bank account, 401(K)s or IRAs, real estate, and vehicles that you own. If you have any mortgages or loans out on your assets, they are deducted from the fair market value of the assets to arrive at your collection potential. Monthly income and expenses is a personal financial statement showing where your money is going each month. It takes into account household income, food and clothing, housing and utilities, vehicle costs, health care, and current year taxes, etc.
What does the business section cover?
The business section covers the same types of things that the personal section does, just caters it to your businesses’ information. Things such as business assets, bank accounts, and payment processors are all included. It also covers the gross income and an average of the last three months of business expenses such as materials, inventory, wages, rent, and current taxes.
Who is the information submitted to?
A 433-A is submitted when a taxpayer’s account is assigned out to a revenue officer, or in other words, a specific person trying to collect on a taxpayer’s federal tax liability. The information is more successfully submitted when supporting documentation is included for each of the expenses, and assets if possible.
What does the 433-A not pertain to?
A 433-A does not pertain to any partnership, corporation, or Limited Liability Company classified as a corporation. If your business is one of the preceding classifications, you will need to fill out a 433-B. It also is not required if there is not a revenue officer assigned to your account. In this case there is a form 433-F that would need to be filled out. It is also not submitted with an Offer in Compromise. There is a similar Form 433-A(OIC) to be submitted with an Offer in Compromise.
What should I do if I need a revenue officer has called me and requested a 433-A?
You should schedule a free initial consultation with one of our attorneys or CPAs. As with all forms, the more practice that you get with preparing them, the more successful you become. You can contact us at 877-829-2455 to schedule a initial consultation.