When you’re trying to negotiate paying back Federal tax liability, you’ll need to fill out Internal Revenue Service Form 433-B, a precursor to the 433-D Installation Agreement. If you’re reading this, you’ve probably already had a look at the form and its half-a-dozen pages. And just so you know, there’s a big difference in form 433-B and another one that you’ve probably run across, the 433-B (OIC). Yes, it kind of rhymes, which is a good way to discern between the forms.
What is the IRS Form 433-B?
Form 433-B is used for:
- Payments–requesting an installment agreement with the IRS
- Financial hardship–requesting a non-collectible status which delays paying taxes
Form 433-B (OIC) is more for a compromise or settlement with the IRS. Both forms are six pages long, but the sections are much different to fill out. There’s a few more 433 forms in the series, but we’re not touching those here.
So before you cringe, go ballistic or cry out, notice that 433-B is divvied up into 4 main sections. We’re here to help you chunk it out, one section at a time, which is much better for your digestion.
Section 1: Your Business Information
It’s called section 1, but it’s not much of a section. It simply asks you for your business information. You know, your name, address, what kind of business you are and your employee ID number. This kind of stuff you fill out on forms all the time so it should be no big deal. It does ask for your payment processor (PayPal, Google Checkout and the like) as well as what type of credit cards you accept as a business, though.
There’s the big three, Visa, MasterCard, and American Express. You’ll need your merchant account number and issuing bank information, so you may have to take a gander in one of your digital files to get the info. Additionally, if you accept Discover, Diner’s Club or any other card, you’ll have create an attachment with the information. Easy peasy, right? Okay, let’s carry on to section 2.
Section 2: Business Personnel and Contacts
Section 2 asks you who your business partners are. This might be actual co-owners, silent partners, officers, Limited Liability Corporation (LLC) members and major shareholders. Anyone who has a say in how you run your business goes here. It doesn’t matter if they are foreign or domestic. They just give you space for 4 people, so if you have more, you’ll have to attach a list.
You’ll need their contact information and their official title for starts. Then you need to answer if they are responsible for payroll deposits or taxes. You will also need their taxpayer identification number, how much they own of your company in shares and percentage as well as their annual salary or draw for owning a piece of the action.
Section 3: Other Financial Information
Since the IRS instructions for Segment 3 is as vague as the murky waters of a mud puddle, this is where you’ll list the kinds of financial information that sparks all kinds of applicable document attachments. Basically, the IRS wants to know how you are functioning as a business entity.
These are, at first, yes or no questions. If your answers are no, then you’re essentially done and can move on to section 4. If you can answer yes to any of the questions, you need to fill out the details. It may take a little time to gather the information, so here’s the gist:
You’ll need to list any Payroll Service Provider or Reporting Agent, their address and the date you began to use them.
Next, it asks if the business is a party to a lawsuit. The way it is asked right after the previous question, makes you wonder if it is asking about your payroll service provider or a reporting agent or your business. It is your business that it is asking about.
Other questions ask about any bankruptcies, transferred assets, subsidiary status and monies owed to your business by parties involved in it. Then lastly, they ask about whether you anticipate any increase or decrease in income and if you are a Federal contractor.
Section 4: Business Asset and Liability Information (Foreign or Domestic)
Section 4, aka “the longest section” requires more detail than you’re likely to know off the top of your head. So grab your favorite beverage and snack and let’s get at it.
Cash on hand. This is the cash in your petty cash, cash register, and stashed away in your safe. Pretty simple. Just add it up and put it on the sheet. Do not include anything in the bank. It also asks you to list the contents of your safe if you do have one. But there’s not much space on the sheet to do so. So be brief and use list words like: cash, bonds, keys, etc.
Next you list your business bank accounts, even if you’ve nothing in them. This means brick-and-mortar banks, online banks, safety deposit boxes. If you’ve not looked at them in a while, you’ll have to sort out the type of account, the account’s full name, address, account number and balance as of the date you’re writing it on the form.
Accounts and Notes Receivable. This sub-section includes listing any Federal Government Contracts or other business contracts. You will need all names and addresses, contact information, status (referring to age, etc.), date due, invoice number or government grant/contract information and amount due. At the end of your list, you’ll tally the outstanding balance.
You’ll be listing your investment assets. This includes stocks, bonds, mutual funds, CDs, commodities, virtual currency like bitcoin, and stock options. Unless you’ve got your business hands in everything, this sub-section might not be too stressful. But you will total them up at the end.
Available credit is an easier sub-section. Just list your lines of credit and credit cards. You’ll, of course, list full names, addresses and contact info as usual. But be prepared to look at your latest statements to get your credit limits, what you owe and your available credit. Again, you will total up this sub-section, including any attachments regarding available credit.
Still with us? This section is almost done and then surprise! There’s a fifth section, but depending on the type of legal business you are, you may have this information ready to go. More about that in a minute. Let’s finish up section four.
Here you’ll list your real property, vehicles, business equipment, and intangible assets. Not only will you include what you already own, but what you are leasing and all the lenders involved. Be prepared to list specifics like vehicle mileage, tag numbers and the sort. Intangibles includes logos, licenses, patents, domain names, everything from trade secrets to trademarks and copyrights.
Section 5: Your Monthly Income and Expense Statement
If you’re a business entity that creates this on a regular basis, (monthly, quarterly, annually), you’ll have this information at your fingertips. If not, you will have to list your gross receipts, rental income, interest income, dividends, cash receipts and miscellaneous income like referral fees. Your expenses are the costs of carrying out your business. This doesn’t include non-business expense like depreciation or bad debt.
Consult a Tax Professional Today
Once you get the information lined up, it’s just a matter of putting it on the form. The form is pretty straightforward for the most part. But if you’re having troubles, contact us at Silver Tax Group. We’re experts at getting your duck in a row fast with proven results that will make you breathe easy.