Form 433 B – Developing a Tax Solution for Your Business
IRS Form 433 B – the Collection Information Statement for Businesses
Who needs a Form 433 B?
The IRS requires businesses that owe federal income tax that cannot be paid in full to submit the 433B form. It is the first step toward developing a payment plan or resolving an unpaid federal income tax bill for a business with a federal tax debt so that the IRS can evaluate the request in order to determine how to collect the unpaid tax amount. Whenever a business requests the IRS to allow them to make installment payments or for a delay on paying taxes because of hardship, the IRS requests a completed Form 433-B. The types of businesses that file a Form 433B are: corporations, partnerships, or Limited Liability Companies (LLC).
What is Form 433 B for?
The IRS uses the 433 B Form as a way to collect information on businesses that owe taxes. It provides a financial snapshot of a business that needs to resolve a business tax liability. A business lists basic business information including income and payment methods, partners, shareholders, payroll information, any lawsuits, transferred assets, business affiliations, bank accounts, outstanding balances, investments, property and equity, bankruptcies, and other liability and asset information. The IRS uses the detailed financial information supplied on the form to determine if there is a sufficient ability for the business to fully pay its taxes. It also helps the IRS determine whether the business has the cash flow and/or liquid assets to pay the debt in the short-term or long-term.
The IRS needs to determine what assets are available to be levied; if an Offer in Compromise is a better option; whether an installment agreement will work; or if the business must request a non-collectable status to delay paying taxes. The IRS may file a tax lien to protect its interest in the business’ assets during any delay periods.
Once the IRS determines that a business is currently not collectible (CNC), based on evaluating the accounts receivable or equity in assets, then an operating business is subject to mandatory follow-ups. If any subsequent liabilities are incurred, the business may be investigated. If the investigation shows that the additional liabilities are not resolved, the IRS can reactive the CNC account for collection action.
If the business reports assets like a tow truck that is used to generate income, the business may be allowed to exclude equity in these assets. After considering all the information on Form 433B, the IRS will determine a tax payment arrangement in the collection process, but will add interest and penalties to the outstanding tax debt. The information provided on this form is valid for 12 months.
Is Form 433 B accompanied by other forms?
• If you own a business, Form 433 B is accompanied with Form 9465 (Installment Agreement Request) to prove financial status and determine if the business is eligible.
• Attach a Form 2848 Power of Attorney, if you would like your attorney, CPA, or qualified representative to represent you. This will allow that individual to receive and inspect your confidential business tax information.
• Also, attach a copy of your last federal tax return with all schedules and attachments.
• A list of applicable attachments is listed on the form publication. These are not IRS forms. You are also required to attach lists and explanations that detail totals that you have entered on the forms that are suggested throughout the form.
• If you submit Form 656, Offer in Compromise, be sure that you submit Form 433-B (OIC) not this form 433-B.
When is Form 433 B due?
When a business has a debt that they are unable to pay to meet the IRS deadline, the business can ask if their account can be placed in Currently Not Collectible Status. In the meantime, the business might ask for a delay in payments or an installment plan in the collection process. The account is placed on hold until the financial situation is assessed and/or improves. Before the IRS agrees to an Installment Agreement or an Offer in Compromise, they will request that the business submit a 433-B Collection Information Statement form to substantiate the Currently Not Collectible Status request.
How do I fill out Form 433 B?
Be as detailed as possible when filling out form 433 B, because the IRS returns incomplete forms. Use N/A instead of leaving boxes unfilled when necessary.
1. Fill in the business information in Section 1. Complete items 1 through 6. Include mobile commerce and accounts and all credit cards accepted. Include attachments if additional space is necessary. If your business has employees, include monthly gross payroll.
2. Fill in your business personnel and contacts in Section 2. List all partners, officers, major shareholders, members, or other essential personnel of the business. Also include their contact information, ownership percentages, shares or interests in the business, and whether that person is responsible for depositing payroll taxes.
3. Section 3 provides the IRS with detailed financial information that covers a wide spectrum of business issues. List if your business has ever experienced lawsuits, bankruptcies, debts, asset transfers, affiliations, and if the business anticipates an increase or decrease in business income.
4. Fill in your business asset and liability information in Section 4. Include how much cash on hand the business currently has and whether there is an on-site safe and its contents. Also, include business bank accounts, detailed information about the business assets and liabilities, contracts, investments, available credit, vehicles, business equipment and real estate.
5. Section 5 reports your monthly income and expenses statement for business to the IRS. Specifically, the total monthly income and expenses are calculated during a time period that reflects your typical business income and expenses. Include whether you use a cash or accrual accounting system.
6. Finally, sign and date the form.
7. Attach all the applicable attachments that are listed in Sections 3 and 4. Also, include all bank statements and investment statements for the past three months. Include current lender/lessor statements regarding all assets and creditor financing statements with current balances and monthly payment amount. Include three months worth of bills or monthly statements for recurring expenses. Include profit and loss statements and all loan payoffs. Include a copy of the last income tax return filed and all attachments.
Where do I send Form 433 B?
Mail your 433-B and related financial document(s) to the appropriate IRS processing office for your state. You may wish to send it by Certified Mail so you have a record of the date it was mailed.
If you reside in:
AK, AL, AR, AZ, CO, FL, GA, HI, ID, KY, LA, MS, MT, NC,
NM, NV, OK, OR, SC, TN, TX, UT, WA, WI, WY
Mail your application to:
Memphis IRS Center COIC Unit
P.O. Box 30803, AMC
Memphis, TN 38130-0803
If you reside in:
CA, CT, DE, IA, IL, IN, KS, MA, MD, ME, MI, MN, MO, ND,
NE, NH, NJ, NY, OH, PA, RI, SD, VT, VA, WV; DC, PR, or
a foreign address
Mail your application to:
Brookhaven IRS Center COIC Unit
P.O. Box 9007
Holtsville, NY 11742-9007