How to Complete IRS Form 433-B

Dealing with taxes is one of the most stressful parts of running a business. It can be even more overwhelming when you owe taxes but can’t afford to pay your full tax bill immediately. This could be for a number of reasons, such as a financial hardship, but the IRS does offer a few options for relief.

If this is the case, you may have been asked to fill out IRS Form 433-B, which is a collection information statement about your business. The most common use for this form is when you’re trying to get a business installment agreement to pay off your tax balance over time. 

So, what is Form 433-B, and who uses it? This guide walks through all the ins and outs so you can provide all necessary information to the IRS and get your business back in good standing.

What Is Form 433-B?

Form 433-B is the Collection Information Statement for Businesses. The IRS uses this form to obtain information from a range of business types to figure out how they can pay for their tax bill. It’s typically only used when a business owes money in federal taxes but can’t afford to pay them by the tax deadline.

These types of businesses use Form 433-B:

• Corporations
• S corporations
• Partnerships
• Exempt organizations (i.e., nonprofits)
• Limited liability companies (LLCs)

Generally, LLCs only use this form if they are taxed as an S-corp or if they are a multi-member LLC that files taxes as a partnership. If your LLC is a sole prop, you will probably only need to file Form 443-A not 433-B.

Businesses provide information about the company itself and its financial situation with this form. Financial information may include cash and assets, liabilities, investments, stakeholders, salaries, and property. This form also asks for monthly income and expense details. 

When Would a Business Use Form 433-B?

If a business can’t afford its tax bill, there are a few options for negotiating with the IRS. These are applying for a payment plan, asking for a delay in collections, or setting up an offer in compromise. All three of these options will likely require Form 433-B.

• Payment plan: A payment plan, or installment agreement, is an option where you would pay a monthly payment for a set period of time to pay off the tax debt.
• Collections delay: If the IRS agrees that your business is facing a financial hardship, the agency could decide to temporarily delay collections, putting your account under currently not collectible (CNC) status. But, remember that this delay is only temporary.
• Offer in compromise: With this option, you send in an offer and documentation showing that this is all you can afford to pay. The IRS may agree to accept your offer if that amount is all they could reasonably expect to receive from you.

The IRS offers these tax relief options so that you don’t have to continue accumulating penalties and interest when you can’t pay your business taxes (although the delay in collections may still require penalties and interest). Explore which option may be the right way forward for your situation, and talk to a tax expert when you’re not sure.

How is 433-B Different from Other 433 Forms?

IRS Form 433-B is just one of several 433 forms the IRS uses for financial information reporting: 433-A, 433-B, and 433-F. Forms 433-F and 433-A are used if you’re an individual or self-employed person, while Form 433-B is reserved for businesses (corporations and partnerships). 

Individuals use Form 433-A or 433-F when trying to get an installment agreement or CNC status. Form 433-A for OIC is for an offer in compromise for individuals, and Form 433-B for OIC is for the same but for businesses.

There is also Form 433-D. Once you get approved for a payment plan, this is the form you use to set up automatic debits from your bank account.

Still not sure which form you need? Talk to a tax professional to find out how to properly report your financial information to the IRS.

Instructions for the 433-B Form

Using the 433-B form allows you to provide important financial information about your business to the IRS so you can stay in good standing. The IRS will determine whether it accepts your offer, application for a payment plan, or financial hardship when you provide this documentation. 

However, it’s not always easy to fill out Form 433-B, especially if it’s your first time and you’re already stressed about paying taxes. Here are the steps to take to complete each section of the form properly:

Section 1: Business Information

This section outlines your basic business information, including name, address, type of business, EIN, employees, payroll, and other details. Be diligent in providing only the most up-to-date information about your business.

Section 2: Business Personnel and Contacts

The next part asks for information about any partners, officers, LLC members, and major shareholders, or similar personnel related to the business. You’ll need to provide name, address, title, ownership percentage, salary, and other details about each person.

Section 3: Other Financial Information

This next section asks for details about the business’s payroll provider or reporting agent, lawsuits, bankruptcy filings, amounts owed to the business, transferred assets, affiliations, income changes, and whether the business is a federal government contractor.

Section 4: Business Asset and Liability Information

Section 4 asks about cash on hand, business bank account information, investments, debts, available credit, real property, equity, and intangible assets. Provide detailed and accurate information about all of your assets and liabilities. 

Section 5: Monthly Income/Expenses Statement for Business

This final section is where you’ll provide information about your accounting method and your total income and expenses each month. Income includes gross receipts, rental income, interest and dividends, and cash receipts; expenses include any monthly business expenses incurred, such as rent, insurance, salaries, and repairs.

What Attachments Do You Need with Form 433-B?

Of course, you likely cannot fit all applicable financial information onto this form, so you’ll need to provide further documentation as attachments when you submit. You may need to attach these documents:

• Bank statements
• Bills
• Credit card statements
• Income tax return copies
• Lender statements
• Profit and loss statements

This means you need to be diligent about recordkeeping and reporting. Documents and numbers must be accurate and updated so you don’t have to deal with any further issues with the IRS. 

Tips for Completing IRS Form 433-B

Now that you know how to fill out the sections of IRS 433-B, keep in mind these tips and strategies for getting it done properly and continuing to protect your business:

Gather All Financial Information

The IRS will need all relevant information about the financial health of your business. Start preparing reports that show your assets and liabilities, income and expenses, and general details about how the business is run, who is involved, and who gets paid what. The best way forward is to be very thorough and detailed.

Ensure Personnel and Stakeholder Information is Updated

Any stakeholders, partners, or officers you need to list may have updated information, such as a new address. Contact them to make sure there are no changes before submitting Form 433-B to the IRS. Everything needs to be accurate and current, so ask if they have a new address or any other changes.

Be Open and Honest with the IRS

Many tax issues are caused by individuals or businesses not being completely open about their financial situation with the IRS. Unfortunately, this only leads to more financial trouble when they’re hit with penalties and interest. 

Be clear, transparent, and honest with the IRS about the information they’re asking you for. Never try to hide anything or underreport income. If you can’t afford your tax bill, the IRS will usually work with you in one way or another, so don’t try to get away with not paying what you owe.

Ask Your Accountant for Assistance with Documentation

If you have a business accountant, they will likely have a lot of the required information prepared already. Ask them for previous tax returns or income statements so you save time on gathering this information yourself.

Consider What Your Numbers Say

Make sure everything you provide the IRS is backing up your request; otherwise, you may be making the wrong request. For example, if you’re trying to get CNC status because of a financial hardship, but your financial documentation shows that you have been bringing in a lot of revenue and growing your business, the IRS may have further questions. Make sure your story aligns with your numbers.

Prepare for Taxes All Year

As a business owner, you should be thinking about taxes all year—not just when it’s tax season. An accountant or tax attorney can help you with this, but if you do it yourself, create a system so you never miss deadlines and can run frequent reports. It’s always better to stay on top of tax obligations so you’re never hit with a surprise.

Work with a Tax Expert 

Business taxes are complicated, especially when you have employees and payroll obligations to worry about. You never want to miss a requirement to stay compliant. This is why working with a tax professional is a wise choice for the success of your business. It’s also smart to talk to a tax attorney when you’re unable to pay your tax bill and are looking for relief options with Form 433-B. 

Mastering Business Taxes with a Tax Attorney

Using a 433-B usually means you need tax relief for your business. Perhaps you can’t pay off what you owe and are looking to do it in a few installments. Or, you’re dealing with a sudden financial hardship and need more time to pay your tax bill. 

Whatever issue you’re facing, you don’t have to do it on your own. The team at Damien’s Law is here to help you along the way. We break down tax law for you so you always stay compliant and in-the-know. We’ll evaluate your financial situation and advise you on the best way forward with the IRS. 

Talk to Damien’s Law today to learn more about our tax relief services for businesses.

FAQs about Form 433-B

What are my options if I can’t afford to pay business taxes?

The IRS offers several forms of relief that you can apply for when you can’t pay. You can set up a payment plan to pay over time, apply for an offer in compromise to settle your debt, or ask for a temporary delay on collections until you get back on your feet.

When would I use Form 433-B?

For all three of these relief options, you would use Form 433-B as a business to send your financial information to the IRS. Follow all instructions on the form carefully, and be sure to submit any relevant attachments about your financials, including bank statements.

Do self-employed people use Form 433-B?

No. Self-employed people and individuals will use Form 433-A or Form 433-F to report their financials to the IRS. Form 433-B is for businesses, including S corporations, C corporations, and partnerships.

What information do I have to provide on Form 433-B?

The 433-B form asks for business details, including name, address, and type; monthly income and expenses; assets and liabilities; and information about officers, personnel, and stakeholders. Be as thorough as possible on Form 433-B to ensure compliance.

How do I delay collections for my business if I have a hardship?

The IRS takes action to collect any taxes owed as soon as possible. However, the agency will sometimes put accounts in the currently not collectible (CNC) status if they prove they have a financial hardship. 

However, keep in mind that even with CNC status, you will continue to accrue penalties and interest, and the 10-year period the IRS has to collect will start after the temporary delay ends. Form 433-B provides information the IRS needs to determine your financial situation and if they recognize a hardship.