IRS Form 433-A “Collection Information Statement for Wage Earners and Self-Employed Individuals” Explained

IRS Form 433-A, also known as the Collection Information Statement for Wage Earners and Self-Employed Individuals, is a form that the Internal Revenue Service (IRS) requires taxpayers to complete to provide information about their financial situation. The IRS uses this form to determine taxpayers’ ability to pay their tax debt and develop a payment plan, if necessary.
The IRS tax code, specifically sections 6001, 6011, and 6012, requires taxpayers to provide truthful and complete information when requested by the IRS. This includes providing information about income, assets, and expenses. The IRS uses this information to determine a taxpayer’s ability to pay their tax debt and develop a payment plan in the best interest of the taxpayer and the government.

How Your Data is Compiled

Form 433-A is divided into two sections: section one, which is for wage earners, and section two, which is for self-employed individuals. Each section requests information about the taxpayer’s income, expenses, and assets.
In section one, wage earners must provide information about their income, such as wages, salaries, and tips. They must also provide information about their expenses, such as housing, food, clothing, and transportation. Additionally, wage earners must provide information about their assets, such as bank accounts, stocks, bonds, and real estate.
In section two, self-employed individuals must provide information about their income, such as gross receipts and net profit. They must also provide information about their expenses, such as the cost of goods sold, rent, and utilities. Additionally, self-employed individuals must provide information about their assets, such as equipment, inventory, and accounts receivable.

Collection and Verification

It is important to note that Form 433-A is not a tax return and should not be used to report taxable income or taxes owed. The form is solely used for collection purposes and to provide information about a taxpayer’s financial situation.
The IRS also uses Form 433-A to verify the information provided by the taxpayer. The IRS may request additional documentation, such as pay stubs, bank statements, and tax returns, to verify the information provided on the form. If a taxpayer fails to provide the requested information or provides false information, they may be subject to penalties, fines, or even criminal prosecution.
Additionally, the IRS may use the information provided on Form 433-A to determine if a taxpayer is eligible for specific collection alternatives, such as an Offer in Compromise or a Currently Not Collectible status. An Offer in Compromise program allows taxpayers to settle their tax debt for less than the total amount owed. A Currently Not Collectible status program allows taxpayers to temporarily postpone their tax debt until their financial situation improves.

Summary

Form 433-A is an important tool used by the IRS to determine a taxpayer’s ability to pay their tax debt and to develop a payment plan. Taxpayers are required to provide truthful and complete information on the form as required by the IRS tax code. Failure to provide the requested information or providing false information may result in penalties, fines, or even criminal prosecution. It is important for taxpayers to understand the importance of Form 433-A and to provide accurate information to ensure that the IRS can properly evaluate their financial situation and provide the appropriate collection alternatives.
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