If you owe the IRS more than you can afford to pay, Form 433-A will likely become one of the most important documents in your tax resolution case. This Collection Information Statement is the IRS’s tool for understanding your complete financial picture—and it directly determines what resolution options are available to you, from installment agreements to offers in compromise to currently not collectible status.
At the Law Office of Pietro Canestrelli, we’ve completed hundreds of Form 433-A submissions for California taxpayers facing IRS collection action. As a former IRS agent, Pietro Canestrelli knows exactly how IRS Collection officers review these forms and what common mistakes lead to rejected applications or unfavorable collection decisions. This comprehensive guide walks you through every section of Form 433-A, explains what the IRS is looking for, and helps you present your financial situation accurately and effectively.
What Is Form 433-A and When Is It Required?
Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) is the IRS’s comprehensive financial disclosure form for individual taxpayers. The IRS uses this form to:
- Evaluate your ability to pay outstanding tax debt
- Determine appropriate collection alternatives
- Calculate the terms of installment agreements
- Assess offer in compromise submissions
- Decide whether to place accounts in currently not collectible status
When You’ll Need to Complete Form 433-A
The IRS typically requires Form 433-A when:
- You owe more than $50,000 and want an installment agreement
- You’re applying for an offer in compromise
- You’re requesting currently not collectible status
- You’re requesting penalty abatement based on financial hardship
- A Revenue Officer is assigned to your case
- You need to negotiate release of a levy or lien
For debts under $50,000, streamlined installment agreements may be available without full Form 433-A completion. Our guide on handling significant IRS tax debt explains the different thresholds and options.
Overview of Form 433-A Sections
Form 433-A is extensive—typically 6-8 pages depending on your situation. The form is divided into these major sections:
- Section 1: Personal Information
- Section 2: Employment Information (for wage earners)
- Section 3: Personal Asset Information
- Section 4: Business Information (for self-employed)
- Section 5: Business Asset Information
- Section 6: Monthly Income and Expense Analysis
- Section 7: Certification and Signature
Section-by-Section Completion Guide
Section 1: Personal Information
This section captures basic identifying information for you and your spouse (if married). Required information includes:
- Full legal names and Social Security numbers
- Current address and how long you’ve lived there
- Date of birth
- Driver’s license information
- Marital status
Key consideration: If you’re married but filing separately or your spouse isn’t liable for the tax debt, you may still need to include their information depending on your state’s community property laws. California is a community property state, which has significant implications for married taxpayers. See our article on protecting yourself when a spouse has tax problems.
Section 2: Employment Information
For each employed taxpayer (and spouse), provide:
- Employer name, address, and phone number
- How long you’ve worked there
- Occupation/position
- Take-home pay frequency and amount
Be precise about your take-home pay—this isn’t gross wages, but what you actually receive after all deductions. The IRS will verify against pay stubs and employer records.
Section 3: Personal Asset Information
This is the most detailed section for most taxpayers. You must disclose:
Bank Accounts
List every bank account, credit union account, savings account, and money market account. Include:
- Bank name, address, and account number
- Type of account
- Current balance
The IRS will likely request bank statements to verify these balances. Significant discrepancies can damage your credibility.
Investment Accounts
Disclose all brokerage accounts, retirement accounts (IRAs, 401(k)s), stocks, bonds, and other investments. Include current market values.
Real Property
For each property you own (primary residence, rental property, vacation home, land), provide:
- Property address and description
- Date purchased and purchase price
- Current fair market value
- Current loan balance and monthly payment
- Lender information
- How title is held
The IRS uses this information to calculate your equity in real estate. Our article on asset protection strategies explains how property ownership affects collection decisions.
Vehicles
List all cars, trucks, motorcycles, boats, and recreational vehicles. Include year, make, model, mileage, loan balance, and estimated fair market value.
Other Assets
The form asks about life insurance policies with cash value, valuable personal property (art, jewelry, collections), and any other assets of significant value.
Section 4: Business Information (Self-Employed)
If you’re self-employed, Section 4 captures detailed information about your business:
- Business name, address, and EIN
- Type of business entity
- Number of employees
- Average monthly gross receipts
- Business bank account information
Self-employed taxpayers often face additional scrutiny because business and personal finances can blur. Accurate reporting is essential. See our business formation and quarterly taxes guide for related information.
Section 5: Business Asset Information
Business assets must be disclosed separately from personal assets:
- Business equipment and machinery
- Inventory
- Business vehicles
- Accounts receivable
- Business real estate
Section 6: Monthly Income and Expense Analysis
This section determines your “disposable income”—what the IRS believes you can afford to pay monthly toward your tax debt. You’ll report:
Monthly Income
- Wages, salaries, and tips
- Self-employment income (net)
- Social Security and pensions
- Rental income
- Interest and dividends
- Child support and alimony received
- All other income sources
Allowable Monthly Expenses
The IRS uses “Collection Financial Standards” to determine allowable expenses. These national and local standards set caps for:
- Food, housekeeping, clothing, personal care: National standard based on household size
- Housing and utilities: Local standard based on county
- Transportation: National standard for ownership and operating costs
- Out-of-pocket healthcare: National standard based on age
You can claim actual expenses up to the IRS standards, or actual expenses above the standards if you can demonstrate necessity.
Other Allowable Expenses
Beyond the standards, you may deduct:
- Federal, state, and local tax payments (current year)
- Court-ordered payments (child support, alimony)
- Term life insurance premiums
- Secured debt payments (mortgages, car loans)
- Student loans for dependents
Critical Mistakes to Avoid
Based on our experience helping California taxpayers, these are the most common Form 433-A mistakes:
Underreporting Assets
The IRS has extensive data-matching capabilities. They can identify undisclosed bank accounts, real estate, and vehicles. Omitting assets destroys your credibility and can lead to rejection of any proposed resolution.
Overreporting Expenses
Claiming expenses significantly above IRS standards without documentation raises red flags. Every claimed expense should be supportable with receipts, bills, or statements.
Math Errors
Simple arithmetic mistakes make your submission appear careless and may delay processing. Double-check all calculations.
Incomplete Information
Blank fields or “unknown” responses will result in IRS requests for clarification, delaying your case. Research any information you don’t immediately know.
Outdated Information
The IRS wants current financial information—typically within 90 days. Using outdated bank statements or asset values can undermine your submission.
Documentation You’ll Need to Gather
Before completing Form 433-A, assemble these documents:
- Recent pay stubs (typically 3 months)
- Bank statements for all accounts (3 months)
- Investment account statements
- Mortgage statements showing current balance and payment
- Vehicle loan statements
- Current utility bills
- Property tax statements
- Insurance declarations (auto, home, life)
- Business profit/loss statements (if self-employed)
- Recent tax returns (personal and business)
How the IRS Uses Form 433-A Information
Understanding the IRS’s analysis helps you present your case effectively:
Reasonable Collection Potential (RCP)
The IRS calculates your RCP—the amount they believe they can realistically collect. This formula considers:
- Equity in assets (what could be seized and sold)
- Future income (disposable income × remaining collection statute)
Your RCP determines the minimum acceptable offer in compromise and affects installment agreement terms.
Ability to Pay
For installment agreements, the IRS calculates your monthly disposable income (total income minus allowable expenses) and expects payment of this amount toward your debt.
Learn more about resolution options in our California tax negotiation strategies article.
Tips for a Successful Form 433-A Submission
Be Completely Honest
The information you provide is submitted under penalty of perjury. Misstatements can result in rejected applications, additional penalties, and even criminal referral.
Document Everything
Don’t submit Form 433-A alone—include supporting documentation for all claimed assets, income, and expenses.
Explain Unusual Items
If anything in your financial picture is unusual, include a brief explanation. This prevents IRS assumptions that could hurt your case.
Consider Professional Help
Form 433-A errors can result in denied resolutions, unfavorable payment terms, or aggressive collection action. Professional preparation ensures accuracy and presents your situation most effectively.
What Happens After You Submit Form 433-A
After receiving your Form 433-A, the IRS will:
- Verify information: Cross-check against IRS records and third-party data
- Request additional documentation: May ask for specific records to support claimed items
- Calculate RCP: Determine your reasonable collection potential
- Make a determination: Approve, reject, or counter your proposed resolution
If you disagree with the IRS’s determination, you have appeal rights. Our guide on IRS appeals procedures explains your options.
Get Professional Help With Form 433-A
Form 433-A is not just paperwork—it’s the foundation of your entire tax debt resolution case. How this form is completed can mean the difference between an affordable installment agreement and aggressive collection action, between an accepted offer in compromise and a rejected application.
At the Law Office of Pietro Canestrelli, we help California taxpayers present their financial situations accurately and effectively. As a former IRS agent, Pietro Canestrelli knows exactly how Collection officers analyze Form 433-A and what presentation strategies produce the best outcomes.
Facing IRS collection and need help with Form 433-A? Contact our office today for a consultation. We’ll review your financial situation, explain your resolution options, and help you navigate the collection process.
