Form 433-B Explained: A Comprehensive Guide for Business Collections

Keith CPA form 433-b

With the IRS currently focusing on 1,600 taxpayers who earn $1 million or more and collectively owe hundreds of millions in back taxes, the spotlight on tax compliance has intensified. It’s essential for businesses, regardless of size, to fully adhere to their tax obligations. Completing IRS Form 433-B, the Collection Information Statement for businesses, is a critical component in showcasing your business’s transparency and adherence to tax laws.

This guide is designed to assist you in filling out Form 433 B accurately, ensuring that you meet your responsibilities and safeguard your business’s credibility. By doing so, you can ensure your company is not included in the IRS’s targeted list of those who fail to comply with tax obligations.

What is Form 433-B?

The Internal Revenue Service (IRS) in the US uses Form 433-B as part of their Collection Information Statement series. It is specifically designed for businesses that owe taxes to the IRS but are unable to pay the full amount owed.

Businesses typically use Form 433 B when negotiating payment arrangements with the IRS, such as installment agreements or offers in compromise. By providing comprehensive financial information on the IRS 433B Form, businesses can demonstrate their current financial status and propose a realistic plan for repaying their tax debts.

Eligible Business Entities for Form 433-B

If you want to fill out Form 433 B, you need to be one of the business entities listed below so that you can easily arrange a payment plan with the IRS.

  • Partnerships
  • Corporations
  • Exempt Organizations
  • S Corporations
  • Limited Liability Companies (LLC) are classified as corporations
  • Other LLCs

If you’re running your own business by yourself, fill out Form 433-A for payment plans. For offers to settle for less than you owe, use Form 433-B (OIC), not Form 433-B.

Why the IRS request Form 433-B?

The IRS uses Form 433-B to get a detailed look at a company’s financial health, which helps in deciding the best approach to settling any tax debts. It’s a crucial step for businesses to address their tax responsibilities fairly.

  • To gather detailed financial information about businesses owing taxes.
  • To help assess the business’s ability to pay tax debt.
  • Aids in determining appropriate collection actions, such as payment plans or offers in compromise.
  • Provides insight into the business’s assets, liabilities, income, and expenses.
  • Facilitates the development of feasible resolution plans for both businesses and the government.

Requirements for Form 433-B

Before starting to fill out Form 433-B, gather all vital financial documents related to your business. This includes but is not limited to:

  • Business income information such as profit and loss statements, revenue reports, and balance sheets.
  • Documentation of business expenses, including payroll records, rent or mortgage payments, utilities, and other operational costs.
  • Documentation of assets owned by the business, such as real estate, vehicles, equipment, and inventory.
  • Records of business debts and liabilities, including outstanding loans, lines of credit, and accounts payable.

Before completing Form 433 B, ensure you have a clear understanding of your business’s financial standing. This includes:

  • Total income generated by the business over a specified period.
  • Total expenses incurred by the business, including both fixed and variable costs.
  • Net profit or loss for the business.
  • Assets owned by the business and their current market values.
  • Liabilities and debts owed by the business, including outstanding balances and payment schedules.

How do I fill out IRS Form 433-B?

To fill out IRS Form 433B, businesses need to thoroughly document their financial status, including assets, debts, income, and expenses. This detailed accounting provides the IRS with the information necessary to make informed decisions regarding tax repayment options.

Let’s get each section in detail.

Section 1: Business Information

This section gathers basic details about your business. It includes the business name, contact information, and the type of business structure, such as a partnership or corporation. You’ll need to provide:

  1. Your business name.
  2. The street and mailing address.
  3. The county where your business is located.
  4. Your business telephone number.
  5. The kind of business you run—whether it’s a sole proprietorship, partnership, or corporation and specifics if it’s an LLC.
  6. Your business’s website address.
  7. Whether your business sells products or services online and if you use a payment processor like PayPal or Stripe.
  8. Information about credit cards your business accepts, like Visa or Mastercard, including merchant account numbers and the banks that issued them.
  9. The number of employees you have, the total monthly payroll, and how often you make tax deposits.
  10. If you have signed up for the Electronic Federal Tax Payment System (EFTPS), you can send your tax payments online.

Remember to list the Employer Identification Number (EIN) and the date your business was established. If your business has partners or major shareholders, their details should be included too.

Section 2: Business Personnel and Contacts

This part of the IRS 433B Form is where you list key people involved in your business. For partners, officers, LLC members, and major shareholders, you’ll need to provide:

  1. Their full names and titles.
  2. Complete home addresses, including city, state, and ZIP code.
  3. If they’re responsible for depositing payroll taxes for the business (Yes or No).
  4. Each person’s taxpayer identification number could be a Social Security Number or an Employer Identification Number.
  5. Contact information, such as home, work, or cell phone numbers,.
  6. The percentage of the business they own and any shares or interests they hold.
  7. The amount of salary or income they draw from the business annually.

This information helps the IRS understand who is responsible for business decisions and financial matters.

Section 3: Other Financial Information

This section asks for a range of additional financial details about your business, such as:

  1. Payroll Services: Specify if your business uses a payroll service or reporting agent, providing the name and address, and note the dates when these services began and/or ended.
  2. Legal Proceedings: Disclose any current involvement in lawsuits, indicating whether the business is the plaintiff or defendant, where the case is filed, the case number, the nature of the lawsuit, the anticipated end date, and the amount involved.
  3. Bankruptcy History: State if the business has ever declared bankruptcy, with details on the filing, dismissal, and discharge dates, as well as the case and district information.
  4. Outstanding Debts from Related Parties: Report if there are any outstanding debts owed to the business by related parties, such as officers or partners. Include their names, addresses, loan dates, current balances, and payment schedules.
  5. Asset Transfers: Declare if the business has transferred any assets for less than their value in the past decade. List these assets, their transfer values, dates, and to whom they were transferred.
  6. Affiliates and Subsidiaries: Confirm whether the business has affiliations with other businesses, such as subsidiaries or parent companies, and provide their details.
  7. Anticipated Income Changes: Indicate if an increase or decrease in income is expected, offering an explanation and when this change is anticipated to occur.
  8. Government Contracts: Indicate if the business is a federal government contractor, and if so, include the relevant government contract details in the accounts receivable section.

This section helps to provide a comprehensive view of other financial aspects that may affect the business’s fiscal health and ability to settle any outstanding tax obligations.

Section 4: Business Asset and Liability Information

This section requests detailed information on your business’s assets and liabilities. You’ll be asked to report:

  1. Cash on Hand: You’ll list any cash that is not deposited in the bank, including funds kept at the business premises or in other locations, and provide a total amount.
  2. Business Bank Accounts: For all business bank accounts, such as checking, savings, money market accounts, or other accounts like
    • PayPal or other payment processors, you’ll need to list:
    • The type of account and the financial institution’s name and address.
    • The account number.
    • The current balance as of a specific date.
  3. Cash in Banks: Add up the totals from all accounts to get the total cash in banks.
  4. Accounts/Notes Receivable: If your business has receivables from clients or customers, e-payments, or contracts, including government grants and contracts, you should list:
    • The name and address associated with each receivable.
    • The status, such as age or other relevant descriptors of the receivable.
    • The due date for payment.
    • Invoice numbers, if applicable.
    • The total amount due.
  5. Outstanding Balance: Here you’ll sum the total amounts due from all accounts receivable listed.
  6. Investments: List any investment assets your business has, which could include stocks, bonds, mutual funds, stock options, commodities like gold, silver, and copper, and digital assets such as Bitcoin, Ripple, and Litecoin. For each investment, you need to provide:
    • Whether it’s used as collateral.
    • The current market value.
    • Any loan balances against it.
    • The equity value minus the loan.
  7. Available Credit: Detail all lines of credit and credit cards your business has, including:
    • The full name and address of the financial institution.
    • The credit limit for each line of credit.
    • The current amount owed.
    • The amount of credit available as of a specified date.
  8. Total Credit Available: Calculate the sum of the credit available across all accounts.
  9. Real Property: Include all real estate and property like land contracts, leases, or rentals that the business owns. For each property, provide:
    • A description.
    • The purchase or lease date.
    • The current fair market value.
    • Any current loan balances against it.
    • The monthly payment amount.
    • The date of the final payment.
    • The equity value after deducting loans.
  10. Leased and Purchased Vehicles: For any vehicles that your business leases or owns, such as cars, RVs, motorcycles, or off-road vehicles, include:
    • The make and model of each vehicle.
    • The year they were made.
    • The mileage.
    • The vehicle identification number (VIN).
    • The name and address of the lender or lessor.
    • The current fair market value.
    • The loan balance on each vehicle.
    • The monthly payment amount.
    • The final payment date.
    • Calculate the equity in each vehicle, which is the fair market value minus any loan balance.
  11. Total Equity for Vehicles: Sum up the equity figures from all the vehicles listed to get the total vehicle equity.
  12. Business Equipment and Intangible Assets: List all equipment, machinery, merchandise inventory, and other assets including intangible assets such as licenses, patents, or copyrights. For each listed asset provide:
    • A description of the asset.
    • The location of each asset.
    • The name and address of any lender or lessor.
    • The purchase or lease date.
    • The current fair market value.
    • The current loan balance.
    • The monthly payment amount.
    • The final payment date.
    • The equity value for each asset is its fair market value minus any loan balance.
  13. Additional Assets: Describe any other assets not previously listed. This can include:
    • Intangible assets with a description and the lender or lessor’s contact information if applicable.
  14. Total Equity: Calculate and enter the sum of the equity for these additional assets.
  15. Business Liabilities: Report any outstanding business debts, such as loans or judgments. You will need to specify:
    • The description of each liability.
    • Whether the liability is secured or unsecured.
    • The date any security interest was pledged (if applicable).
    • The balance is currently owed.
    • The date of the final payment.
    • The monthly payment amount.
  16. Total Payments: Add the payment amounts of all listed liabilities to find the total monthly payment obligation for the business.

Section 5: Monthly Income/Expenses Statement for Business

This section is designed to capture a snapshot of your business’s monthly financial activity. Here you’ll detail your typical business income and expenses, offering insight into the business’s profitability. What you’ll need to provide includes:

  1. The total monthly business income is broken down into categories like gross receipts from sales or services, gross rental income, interest, dividends, and other types of income.
  2. The total monthly business expenses, listing out materials purchased, inventory bought, gross wages and salaries, rent, utilities, vehicle costs, insurance, taxes, and any other expenses relevant to your business operations.
  3. For both income and expenses, you’ll enter the gross monthly amount or actual monthly figure, as applicable.
  4. You’ll also affirm that the information provided is true to the best of your knowledge, under penalty of perjury.

This detailed financial information helps the IRS assess your ability to pay taxes and may influence payment plan options.

Get Help With Business Back Taxes

Handling a large tax bill can be tough, but acting early can help reduce interest and penalties. Using IRS Form 433 B is a key step in this process. This Form 433 B allows you to provide a detailed account of your business’s finances, which is essential when setting up payment plans or negotiating tax debts with the IRS.

Once you’ve managed your back taxes, it’s wise to start setting aside about 30% of your monthly business income for future tax obligations. By doing so and keeping these funds in a dedicated account, you ensure that you’re well-prepared for upcoming tax payments, maintaining the stability of your business finances.

Consider seeking professional help when filling out IRS Form 433 B to ensure accuracy and compliance. Other than filling out this form, the Keith Jones tax relief option offers a range of services that can assist further, including IRS audit representation, acting as an IRS wage garnishment attorney, providing Optima tax relief, and facilitating offer in compromise.

Keith Jones

Founder | CPA, Tax Resolution Expert

Keith has found that almost every single person he deals with is not a tax cheat or deadbeat, but someone who is not able to pay their tax debt due to a financial hardship, often of their own accord. Usually, there is a sickness, tragic situation, job or business loss, or some other unfortunate circumstance that leaves them scared and not knowing where to turn.