IRS 433A Financial Statement

IRS Financial Information

Never Give the IRS Financial Information on your own!

NEVER submit a 433A Financial Statement or even talk about financial information with the IRS without Professional help!

The 433A Collections Information Statement or 433A Financial Statement is the tool which the IRS determines your ability to pay. Properly filling out the 433A can greatly change the results in any resolution.

Who’s side do you think the IRS is on?

The IRS is not your friend! They are a Collection Agent for the US Department¬† of the Treasury. The worlds largest and most powerful Collections Agency with over 90,000 employees and a $11,000,000,000.00 budget, that’s 11 BILLION.

The IRS is a master of distortion.

Recently I have had two clients who tried to be honest with the IRS and agreed to conduct a 433A Financial Statement with a Collection Agent on their own. In both cases the IRS concluded that the taxpayer could afford a payment which turn out to be unrealistic. One of cases concluded that they could afford almost their entire income. How can that be? This client is a thirty year old, single who is between jobs but still works part time. Because he has no expenses and some income the bulk of his income was declared as discretionary. Discretionary and therefore available to make an unrealistic payment to the IRS.

The IRS Doesn’t Care, Remember they are “Collections Agents”.

Their job is to get you to commit to the largest amount that you can pay. The IRS has a formula to determine your discretionary income. An over the phone interview usually doesn’t explain the true financial picture.

You don’t have to interview with these Agents.

Politely tell them that you’re going to seek help and someone will get back to them soon. Then call a Professional who has experience with this. Not just any Attorney, CPA, Accountant or Enrolled Agent. I recommend someone with “Tax Resolution” specific experience who specializes in this practice.

Past, Present and Future.

In my practice I use what I call “financial grooming”. Many clients who are in a declining financial position need to be able to show a position of a weaker rather than a stronger financial position.¬† The IRS usually wants the past information such as prior year tax returns. However, if you are in a declining financial position then the past returns will not reflect the proper financial position.

I prefer to use current and future positions to make your case. It’s very difficult for the taxpayer to convey their position properly to the IRS because of the required substantiation. It’s easy to provide the documentation to prove what has happened but hard to prove what the future will show. I often will make a mock 433A financial Statement for past, present and future. This exercise can in part help forecast the best time to submit a resolution.

 Financial Grooming

I usually can get the IRS to hold off on Collections for awhile so that the proper documents can be groomed to show the IRS your correct financial position. Financial Grooming requires patience and strategy. Whether you use a Checkbook, Debit or Credit card your entries must be correct and consistent.

In both cases I submitted a corrected financial statement as part of a Tax Resolution plan and their payments were reduced substantially.

Patience, Patience, Patience

Most taxpayers think that from the commercials that they here about Tax Resolution that the resolution is a relative simple process. IT’S NOT. Most of my clients want this to be over right now. I confess that when I talk to prospective clients in the consultation and I explain the process of Financial Grooming some are not interested and choose to go with someone else.

Sure. I could just send in the information as it is today but I would rather use my skills to get the taxpayer into a financial position that will yield them a better result and that requires a lot of patience.

Updated 6/19/18

In the last year I have added four other clients who have submitted a Financial Statement 433A or a 433F to the IRS on their own to find that the IRS concluded that they could pay much more than they really could. The 433F is a shorter and less evasive financial statement usually used on debts under $50,000.

The information that the IRS wants or needs is different than what the taxpayer knows and a miscommunication of the information turns into a bigger problem. Each of these cases I was able to properly prepare the 433A or 433F to show the corrected information. Three of these cases the resulted in changing the client from an Installment Agreement to the Currently Not Collectible status and no payment.

Please see my article on Asset Valuing.

About John

John E. Jones, EA is an Enrolled Agent enrolled by the US Department of Treasury and has been granted the privilege of representing taxpayers before the IRS. John's specialty is general tax debt resolution and more specifically representing extreme hardship cases and seniors with compliance and resolution.
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