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This article delves into IRS Form 433A for taxpayers in the Columbus, Ohio area. If you are experiencing tax issues and you need representation in the Columbus area, The McGuire Law Firm is an experienced tax lawyer that can help you gain a favorable outcome with the IRS. Get in touch today.
What is Form 433A?
Individuals who owe taxes to the Internal Revenue Service may be asked to submit Form 433A to their assigned revenue officer or a collection agent when attempting to establish an installment agreement to resolve the tax liabilities. Form 433A is titled “Collection Information Statement for Wage Earners and Self-Employed Individuals.” In short, 433A is a financial statement for an individual to complete that allows the Internal Revenue Service to analyze a taxpayer’s ability to resolve their outstanding tax liability.
What Information is Reported on Form 433A?
Form 433A requests general information related to the taxpayer to very specific information about a taxpayer’s assets and income. A taxpayer will provide their name, address, social security number, date of birth, marital status, employment status and information related to their employer. Form 433A also requests information related to a taxpayer’s assets such as checking and savings accounts, retirement accounts, stocks and bonds, cryptocurrency, real estate and vehicles. For each asset, the taxpayer must provide information such as the bank or financial institution the asset is held with, the current value or fair market value of the asset, any debts or loans encumbering the asset and if applicable, the monthly payment associated with the specific asset. For example, when disclosing information related to real estate, a taxpayer would provide the type of real estate such as their primary residence or a rental property, the fair market value of the real estate, the lender or bank that holds the mortgage on the real estate, the remaining mortgage amount, monthly payment on the mortgage and inevitably the equity in the piece of real estate. In regards to income, the taxpayer will report all sources of income on a monthly basis. Wages, interest, net business income, pension income, social security benefits, distributions from businesses, child support and alimony are all reported on the form 433A. In addition to income, the taxpayer will state their monthly expenses for items such as food, clothing, housing, utilities, car payments, car operating expenses, health insurance, out of pocket health care costs, current year taxes, secured debt, court ordered payments and other expenses.
Once compiled, the Form 433A acts as a detailed financial statement for the taxpayer, and the IRS in terms of how the IRS could potentially collect from the taxpayer.
Are Any Other Documents Necessary to File or Produce With Form 433A?
Yes. Depending upon what a taxpayer may own, earn or report on their Form 433A attachments are required. For example, if a taxpayer reports that they have 2 bank accounts, a 401(k), a vehicle payment and own a home in terms of assets, the taxpayer should attach the most recent 6 months bank statement for each bank account, the most current statement for the 401(k) and the most recent car payment statement and mortgage statement showing the total remaining amount due on the loan or mortgage and the monthly payment. If the taxpayer reports income from employment and some self-employment earnings, the taxpayer would be asked to provide their most current pay stub showing year to date wages and withholdings and a profit & loss statement for their business or self-employment earnings.
What If I Fail to or Refuse to Provide Form 433A?
The failure to provide Form 433A to the IRS may lead to the inability to establish an agreement that would prevent enforcement action and thus could lead to bank levies, wage garnishments or even the seizure of assets. While it is natural to be concerned about disclosing so much detailed information when money is owed to the IRS, it can be necessary to resolve the matter.
How Would One Report Seasonal or Sporadic Self-Employment Income?
For self-employed taxpayers and seasonally employed taxpayers in the Columbus area, things are a little different. Generally, a self-employed individual can average their income based upon the most prior or current tax year. If a prior year or the current year is not in line with prior income or what you feel is realistic, an average of the prior 2-3 years could be presented to the Internal Revenue Service. Although, the IRS will generally want to consider what your most recent income is, if you can show that an average of prior years is more realistic in calculating your ability to pay because perhaps your most recent year was a banner year or an anomaly, there is a good chance the IRS will also take this into consideration.
If the IRS has requested you file Form 433A, it is highly recommended that you speak with a tax attorney prior to completing and filing the form. For Columbus taxpayers, if you don’t have proper representation you may get a less favorable outcome than if you find an experienced attorney to help you. An experienced tax attorney at The McGuire Tax Law Firm can assist you in completing the form and how your specific financial facts will be viewed by the IRS. Contact us to schedule an appointment today.