If you have a tax liability, you may have heard of Form 433-A. Officially known as the "Collection Information Statement for Wage Earners and Self-Employed Individuals", this form is where you lay your finances out for the IRS. In addition, the 433-A is not just for people with back taxes, but rather:
- If you are an individual who owes income tax on Form 1040,
- If you are an individual who may be a responsible person for a Trust Fund Recovery Penalty,
- If you are an individual who may be personally responsible for a partnership liability,
- If you are an individual owner of a limited liability company that is a disregarded entity, or
- If you are an individual who is self-employed or has self-employment income. You are self-employed if you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor.
The form's six pages can have a profound impact upon the determination of your installment agreement or offer in compromise result. So, what are the most important things you should know before you do your 433-A?
1) It is a crime to lie on Form 433A
The 433-A is a legal document that is signed under penalties of perjury, and as such it is a crime to lie on the form. You must be completely truthful or face the risk of criminal prosecution for making a false statement. It is akin to giving false testimony under oath during a trial.
2) You cannot "gift" away assets
One of the instincts people have when filling out the 433-A is to transfer or gift things away, because "hey if it's not mine, I don't have to be responsible for it right?"
Wrong.
If I give you the apple, I'm not financially liable for the apple… right? Gifting or transferring assets for less than their reasonable value while insolvent is known as "fraudulent conveyance" and you can be sure the IRS will pick up on any recent transference of assets.
3) It's not just another tax form
It's easy to think about the 433-A as just another tax form that one must complete. This is where people run into problems — they don't realize that it's nothing like filling out a tax form. Your profit/loss statement & balance sheet will be examined thoroughly by an IRS revenue officer to determine accuracy. Unlike Form 1040, which will only reach a human's eyes at the IRS if flagged by the IRS's automated systems, you can be sure that there will be an IRS employee reviewing each line of your 433-A for accuracy.
4) Filling out a 433-A is an art form
As any of our excellent resolution attorneys can tell you, there is an art form to filling out this complex form. Each and every box serves a purpose and can lead to dire consequences if not properly accounted for. Also, presenting the 433-A along with supporting documentation in a way that is organized and easy for the IRS to examine, will greatly increase the likelihood of the IRS agreeing to the financial picture laid out on the form. Attorney’s that have filed countless 433-As get a feel for exactly what the IRS is looking for when they review a 433-A and can present the form in a way that can avoid unnecessary negotiation that will slow down the resolution process.
5) 433-A (OIC) vs. regular 433-A
A regular 433-A and offer in compromise (OIC) 433-A are entirely different beasts.
A revenue officer will not decide accept/reject an offer in compromise and you should not believe any suggestions they may make about your particular case. They represent the government and do not decide. In addition, an OIC will oftentimes need to be elevated to appeals in order to be accepted. This is very important to keep in mind while submitting a 433-A (OIC).
As always, make sure to properly research and analyze all aspects of the forms you submit to the IRS. The 433-A can have a large impact upon your future finances. If you need assistance resolving a tax problem, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com.
