If you have federal tax debt of at least $50,000 that you cannot pay all at once, the IRS has several options that can help you. Before deciding whether you qualify, however, the IRS will require extensive information about your finances.
Washington DC residents will need to complete IRS Form 433-A and B when seeking an installment plan to pay off your debt. Our Enrolled Agent could review the forms with you to prevent mistakes involving unfiled taxes and further delays resolving your tax debt.
What Is the Purpose of IRS Form 433?
When you acknowledge your tax debt but cannot pay it all at once, the IRS may agree to accept installment payments. If you meet your obligations under the agreement, an installment plan offers you relief from further enforcement action like wage garnishment or freezing your bank accounts.
The IRS requires substantial information before it decides whether to accept an agreement, and you provide that information by completing a Form 433 A or B. IRS Form 433-A is for wage-earning individuals and self-employed people with tax debts. IRS Form 433-B is for businesses.
Form 433 requires you to disclose your financial situation in detail. You must be able to pay enough to eliminate your debt within a reasonable period, but you must ensure that you will be able to meet your obligations under the payment arrangement and still maintain your household. A Washington DC attorney could help you determine whether filling out Form 433 and requesting an installment payment arrangement is the best way to resolve your tax debt.
Documentation Is Critical With Form 433
IRS Forms 433-A and 433-B are straightforward, but you must submit extensive documentation with your forms, which can be time-consuming. You must submit your last tax return, plus attachments and proof of employment income for at least the preceding three months. Other required documentation on Form 433 includes:
- Proof of other income, such as pensions or investments
- Bank statements for all accounts
- Statements from life insurers documenting current policies, their type, cash value, and loan amounts
- Statements from lenders describing the payment amounts and balances owed on all loans, including car loans and mortgages
- Proof of all current monthly expenses such as housing, utilities, property taxes, health insurance premiums, medical expenses, and non-work related transportation
- Copies of any court orders requiring payments and proof of those payments
- Copies of any garnishments or judgments already in place
It is wise to work with a DC attorney to ensure your Form 433-A is accurate and you have attached all the required documents. Form 433-B requires similar information pertaining to your business’s finances. You will need to accurately list your business’s assets, liabilities, income, and expenses, and include business contracts to provide or purchase goods or services with your documentation.
Work With a Washington, DC Attorney to Complete IRS Forms 433-A and B
It can be very stressful when you have a high tax bill and cannot pay on time. An installment payment plan, via Form 433, can give you some relief and assurance that the IRS will not take more drastic collection actions.
The professionals at Pontius Tax Law have experience working both inside the IRS and helping clients with disputes or other tax problems. We could help you decide whether an installment agreement is the right solution for you. Call our DC office to discuss what you need for IRS Form 433.