Form 433-A: How to Prepare a Collection Information Statement

Form 433-A, also known as the Collection Information Statement, is a document needed by the Internal Revenue Service (IRS) when an individual or business owes a tax debt.

The form is used to determine the taxpayer's ability to pay and come to a favourable resolution regarding the owed amount.

No matter the size of the tax liability—whether it's a few hundred dollars or thousands of dollars—it's essential to provide accurate and in-depth information on Form 433-A.

In this article, we will discuss all that you need to know about Form 433-A, including the process of completing it, relevant documentation, and tips for a successful outcome.

Who Needs To Complete Form 433-A?

Individuals who need to prepare Form 433-A are:

• Owe income tax on Form 1040
• Might be responsible for a Trust Fund Recovery penalty
• Could be personally responsible for a partnership liability
• Are individual owners of a limited liability company (LLC) treated as disregarded entities?
• Are self-employed or have self-employment income (including sole proprietors and independent contractors)

Note that being self-employed means you are running your own business, frequently working as a sole proprietor or an independent contractor.

Basic Guidelines To Fill Out Form 433-A

Before we discuss the form section-wise, it's important to have an understanding of the basic guidelines to follow when completing Form 433-A. These guidelines are:

• Wage earners are required to complete sections 1, 2, 3, 4, and 5. This includes the signature line on page 4.
• Self-employed individuals are required to complete sections 1, 3, 4, 5, 6, and 7 and the signature line on page 4.
• Write N/A across applicable sections if an item doesn't apply to you. As an example, if you are a wage earner and do not have any self-employed income, write N/A in Section 7.
• Include all requested documentation with your completed Form 433-A.

Note: In the case of joint income tax liabilities, both husband and wife are required to sign the statement.

Section-Wise Guide on How To Prepare a Collection Information Statement (Form 433-A)

Section 1: Personal information

This section requires you to fill in the basic details, like:

1a	Full name of taxpayer and spouse (if applicable)
1b	Address (street, city, state, ZIP code, and country)
1c	County of residence
1d	Home phone
1e	Cell phone
1f	Work phone
2a	Marital status (Married or Unmarried (Single, Divorced, Widowed)
2b	SSN or ITIN and date of birth (in mm/dd/yyyy format) of both taxpayer and spouse
2c	Information like name, age, and relationship with all other persons in the household or claimed as dependents
3a	Do you or your spouse have any outside business interests? Include any interest in an LLC, LLP, corporation, partnership, etc If ‘Yes’ then include the percentage of ownership %) and the title If ‘No’ then tick that
3b	Name of the business
3c	Type of business (select one) Partnership LLC Corporation Other (mention the type)

Section 2: Employment information for wage earners** **

4a	Taxpayer's employer name
4b	Address (street, city, state, ZIP code, and country)
4c	Work telephone number
4d	Does the employer allow contact at work? (tick Yes/No)
4e	How long with this employer (include both years and months)
4f	Occupation
4g	Number claimed as a dependent on your Form 1040
4h	Mention the pay period (weekly, monthly, bi-weekly, or other)

Sections 5a to 5h require you to fill in the same information but for your spouse.

Section 3: Other financial information

Sections 6 to 11 require you to answer questions like:

6	Are you a party to a lawsuit?
7	Have you ever filed for bankruptcy?
8	In the past 10 years, have you lived outside of the U.S. for 6 months or longer?
9a	Are you the beneficiary of a trust, estate, or life insurance policy including those located in foreign countries or jurisdictions?
9b	Are you a trustee, fiduciary, or contributor to a trust?
10	Do you have a safe deposit box (business or personal) including those located in foreign countries or jurisdictions?
11	In the past 10 years, have you transferred any assets with a fair market value of more than $10,000 including real property, for less than their full value?

Section 4: Personal asset information for all individuals (foreign and domestic)

Sections 12 to 16 require you to answer questions like:

12	Cash on hand
13	Personal banking information Provide details for all types of accounts, including checking, savings, electronic (e.g. PayPal), and money market accounts, irrespective of the current balance. Additionally, list any stored value cards like payroll cards from your employer, government benefits cards, or child support payment cards. Bank loans should not be included in this list.
14	Investments Enumerate all types of investments like equities, fixed-income securities, collective investment schemes, digital assets (e.g., Bitcoin, Ethereum, Ripple, and Litecoin), and so on. If you have a stake in any business, include that too.
15	Available credit Obtain credit lines or credit cards provided by financial institutions such as banks, credit unions, or savings and loans. Acquiring a cash advance from a credit card for tax payment might be a viable choice, although it isn't mandatory.
16-16g	Details about life insurance
17a-17c	Details about real property Current fair market value – Indicate the amount you could sell the asset for today. Date of final payment – Enter the date the loan or lease will be fully paid. Location – Include locations of all properties that you own or are purchasing under contract as well as the lender or contract holder.
18-18c	Details about personal vehicles leased and purchased Current fair market value – Indicate the amount you could sell the asset for today. Date of final payment – Enter the date the loan or lease will be fully paid. Vehicle details – Include all vehicles owned and leased like cars, boats, RVs, etc. If you are leasing, list the lessor, and if you are purchasing, then list the lender.
19a-19-c	Personal assets Current fair market value – Indicate the amount you could sell the asset for today. Date of final payment – Enter the date the loan or lease will be fully paid. Personal belongings – Mention the personal items you have like paintings, necklaces, old items, furniture, and collectibles (like coins or guns). Add things you can't touch but are still valuable, like licenses, website addresses, inventions rights, author rights, and land rights for minerals, etc.

Section 5: Monthly income and expenses (Foreign and Domestic)

In Section 5 of the Collection Information Statement (Form 433-A), you will provide a detailed breakdown of your monthly income and expenses, both from foreign and domestic sources.

Note: If just one partner needs to pay taxes and both earn money, write down the total income and costs for the whole family if you split costs or live in a community property state. If that's not the case and you don't have shared expenses, write down the earnings and costs for the person who has the tax liability. The IRS might ask you to verify the expenses.

20	Wages of the taxpayer Input your monthly gross earnings and/or salaries. Do not subtract withholdings or deductions from your pay, like insurance, union fees, auto loan payments, and so on. Include these deductions in total living expenses.
21	Wages of the spouse Input your monthly gross earnings and/or salaries. Do not subtract withholdings or deductions from your pay, like insurance, union fees, auto loan payments, and so on. Include these deductions in Total Living Expenses.
22	Interest-Dividends
23	Net business income (input your monthly net business income from line 89 on page 6)
24	Net rental income
25	Distributions (K-1, IRA, etc.) Input the average amount received per month from Partnerships, Subchapter S Corporations, or Limited Liability Companies. Include 401K distributions if they are not part of Pension Income on lines 26 or 27.
26	Pension of the taxpayer
27	Pension of the spouse
28	Social security of the taxpayer
29	Social security of the spouse
30	Child support
31	Alimony
32	If there’s other income specify here
33	If there’s other income specify here
34	Total Income (add lines 20-33)
35	Food, clothing, and miscellaneous expenses Enter the total sum of this item from the adjacent chart. Should you claim a larger sum for a particular expenditure, you must validate and corroborate that sum. The miscellaneous allowance covers costs that do not fall under any other permitted living expense categories (e.g., credit card bills, bank charges, educational supplies, etc.).
36	Housing and utilities Input your primary residence's monthly rent or mortgage payment. Include the mean monthly payment for these costs as well if they are separate from your rent or mortgage payments: property tax, homeowner or renter insurance, essential upkeep, and servicing, homeowner association dues, condo charges, and utility bills.
37	Vehicle ownership costs Include the monthly lease, purchase, or loan payments.
38	Vehicle operating costs Input the average monthly expenses for items such as insurance, licenses, registration fees, inspections, standard repairs and maintenance, fuel, parking, and tolls.
39	Public transportation Calculate your average monthly expenditure on public transportation. Include the costs of bus, train, and taxi services, as well as all other modes of mass transit.
40	Health insurance Input your monthly expense for health insurance
41	Out-of-pocket healthcare costs These are medical expenses not included in your insurance coverage. In the event you declare a higher sum, it's essential to provide evidence and support for the costs claimed.
42	Court-ordered payments (like child support, and alimony)
43	Child/dependent care
44	Life insurance
45	Current year taxes (Income/FICA)
46	Secured debts (attach a list) Include your average monthly payments for any other secured debts. Do not duplicate mortgage or car payments entered in Items 36 or 37.
47	Delinquent state or local taxes
48	Other expenses (attach a list)
49	Total living expenses (add lines 35-48)
50	Net difference (Line 34 minus 49)

Section 6: Business information

51	Is the business a sole proprietorship
52 a and b	Business name, address and telephone number
53	Employer Identification Number
54	Type of Business
55	Is the business a federal contractor
56	Business website (web address)
57	Total number of employees
58	Average gross monthly payroll
59	Frequency of tax deposits
60	Does the business engage in e-commerce?
61 a and b	Payment processor Include all external payment processors your company uses to take credit card transactions. Don't forget to mention any digital wallet, cryptocurrency exchange (online/crypto), or any other similar services used.
62 a, b, and c	Credit cards accepted by the business
63	Business cash on hand
64	Business bank account Include all types of company banking accounts (like checking, savings, internet-based, phone-based (e.g., PayPal), etc.), even those with zero balance. Include prepaid and telephone cards too. Don't include any bank loans.
65 a, b, c, d, e, and f	Accounts/Notes and (link: https://fincent.com/blog/what-is-accounts-receivable-definition-importance-and-examples text: receivables)
66 a,b, and c	Business assets (Include all tools, books, machinery, equipment, (link: https://fincent.com/glossary/inventory text: inventory), or other assets used in trade or business. Include a list and show the value of all (link: https://fincent.com/glossary/intangible-assets text: intangible assets) such as licenses, patents, domain names, copyrights, trademarks, mining claims, etc.) List all other assets used in trade or business that were not included in previous sections.

Section 7 (only if you are self-employed)

Sections 67 to 75 are for calculating total monthly business income, and sections 77 to 89 are for calculating total monthly business expenses.

67	Gross receipts
68	Gross rental income
69	Interest
70	Dividends
71	Cash receipts not included in lines 67-70
72	Other income
73	Other income
74	Other income
75	Other income
76	Total Income (add 67 until 75)
77	Materials purchased
78	Inventory purchased
79	Gross wages and salaries
80	Rent
81	Supplies
82	Utilities/telephone
83	Vehicle/gasoline/oil
84	Repairs and maintenance
85	Insurance
86	Current taxes
87	Other expenses, including installment payments (Specify)
88	Total expenses (Add lines from 77 to 87)
89	Net business income (Line 76 minus 88)

Frequently Asked Questions

Q1. What is IRS Form 433-A used for?

IRS Form 433-A is used to:

• Assess the financial situation of individual taxpayers.
• Determine a taxpayer's ability to pay outstanding tax debts.
• Establish a payment plan or negotiate an offer in compromise with the IRS based on the taxpayer's financial circumstances.
• Collect required financial information, such as assets, income, and expenses, needed for certain IRS procedures, like installation agreements and specific tax resolution programs.
• Evaluate a taxpayer's eligibility for relief programs like Currently Not Collectible (CNC) status or penalty abatement.

Q2. What is Form 433-A vs. Form 433-F?

Both of these documents are collection information statements used to outline your financial situation, including income and expenses.

While Form 433-F is typically filed in the majority of situations, there might be some instances where the IRS requires you to submit Form 433-A, which entails a more comprehensive disclosure of financial details as compared to Form 433-F.

Form 433-F is used to receive current financial information. This helps the IRS understand how a wage earner or self-employed individual can meet their outstanding tax liability.

Q3. How can I obtain Form 433-A?

To obtain Form 433-A, here’s what to do:

1. Visit the IRS website and search for "Form 433-A" in the search bar.
2. Download the form by clicking on the "Form 433-A PDF" link.
3. Print the form, complete it, and submit it as instructed.

Q4. How do I submit Form 433-A?

The submission location for Form 433-F varies based on your residency. Generally, this form is included when filing Form 9465 (Request for Installment Agreement). If you're sending Form 9465 independently, ensure that it is accompanied by Form 433-F and any additional necessary documentation.

Refer to the instructions provided in Form 9465 for the correct mailing address.

Q5. How do Form 433-A and Form 433-A OIC differ from each other?

Form 433-A represents the more comprehensive version of the Collection Information Statement. In contrast, Form 433-A OIC is a particular edition of the form designed for those pursuing an offer in compromise.