Form 433-A: Collection Information Statement Instructions

The Internal Revenue Service (IRS) utilizes Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to gather a detailed financial picture of a taxpayer. Its primary function is to allow the IRS to assess a taxpayer’s ability to pay an outstanding tax liability. This form is requested by the IRS when a taxpayer seeks a collection alternative to paying their tax debt in full, such as setting up an Installment Agreement or proposing an Offer in Compromise.

The information provided on Form 433-A gives the IRS a comprehensive view of a taxpayer’s income, expenses, and assets. This financial disclosure is the basis upon which the IRS determines eligibility for various relief programs.

Completing Form 433-A: Required Information

Before beginning to fill out Form 433-A, a thorough collection of documents is necessary to ensure accuracy and to substantiate the figures you provide. You will need to assemble a complete file of personal, income, asset, and liability records. The most current version of the form can be downloaded directly from the IRS website.

Personal and Business Information

The initial sections of the form request basic identifying information. Gather documents with the full names, current and prior addresses, and Social Security numbers for both the taxpayer and their spouse. You will also need to list any dependents claimed on your most recent tax return. This part of the form also requires you to provide employment information, and self-employed individuals must detail the nature of their business, including its name and Employer Identification Number (EIN).

Assets and Liabilities

This section requires a comprehensive listing of your assets and liabilities. You must disclose all assets, including cash on hand, balances in all bank accounts, and the value of any investments or digital assets like cryptocurrency. For this, you will need recent statements from all bank accounts, investment or brokerage accounts, and retirement funds like 401(k)s.

You will also list physical assets such as real estate and vehicles, providing the current fair market value and details of any associated loans. This section also requires a full accounting of your liabilities. This includes mortgages, auto loans, student loans, and credit card debt, so you will need to provide the most recent statements for each.

Monthly Income and Expenses

This section is scrutinized to determine your monthly disposable income. You will list all sources of monthly income for your household, which requires proof such as pay stubs for at least the last three months for wage earners. Self-employed individuals must prepare recent profit and loss statements.

The expense portion requires you to list your actual monthly living costs. The IRS will evaluate these expenses against its own established Collection Financial Standards. These standards set allowable amounts for necessary expenses like food and apparel under National Standards, and there are also Local Standards for housing, utilities, and transportation which vary by location.

Submitting Your Completed Form Package

Once you have filled out Form 433-A and gathered all required supporting documents, the next step is to submit the complete package to the IRS. A disorganized or incomplete submission can lead to requests for more information, slowing down the resolution. Your completed and signed Form 433-A should be placed at the top.

Behind the form, arrange your supporting documents in the same order that the information appears on the form. The correct mailing address is typically found on the notice you received from the IRS. If you cannot locate the notice, you may need to contact the IRS directly to confirm the appropriate address.

To ensure you have a record of receipt, it is highly recommended that you send the package using a mailing service that provides tracking and delivery confirmation, such as USPS Certified Mail.

IRS Review and Potential Resolutions

After you submit your Form 433-A, an IRS agent will conduct a review of your financial situation. The agent’s goal is to determine your “Reasonable Collection Potential” (RCP), which is the amount the IRS believes it can reasonably expect to collect. The RCP is calculated based on your net disposable income and the equity you have in your assets.

Based on this financial analysis, the IRS will determine the most appropriate resolution. One common outcome is an Installment Agreement, which allows you to make monthly payments over a set period. Another potential resolution is an Offer in Compromise (OIC), which allows certain taxpayers to resolve their liability for a lower amount than originally owed. OICs are generally granted when the amount offered represents the most the IRS can expect to collect.

In cases where the financial analysis shows that a taxpayer cannot afford to pay any of their tax debt, the IRS may place the account in Currently Not Collectible (CNC) status. This is a temporary suspension of collection efforts, but interest and penalties continue to accrue, and the IRS will periodically review your financial situation.