IRS Debt Relief: How The IRS Assesses Your Ability to Pay

how does the IRS assess your ability to pay outstanding taxes?

Being unable to pay off outstanding taxes can be quite stressful as everyone is well aware of the dire consequences that may arise when the IRS decides to enforce collection measures. This does not mean that the IRS always goes hard on defaulters as there are avenues to get IRS debt relief. The IRS presents debt help facilities such as IRS penalty abatement, IRS tax installment agreement, and offers in compromise to taxpayers that are unable to fulfill their tax obligations for one reason or the other. The big question is, ‘how does the IRS assess your ability to pay outstanding taxes?’

Related Blog Post: 5 Types of IRS Installment Agreement to Pay Your Tax Debt

Collection Information Statement

The Collection Information Statement is a series of Form 433s that is used by the IRS to determine if a defaulting taxpayer is eligible for tax relief according to their ability to pay. The series comprises Forms A, B, and F, with Form F being the most common, depending on how you earn your income.

  • 433 A – Self Employed individuals
  • 433 B – Business-related tax debt
  • 433 F – Wage earners or Self-employed

Form 433 F

Form 433 F is the most common Collection Information Statement used by taxpayers to request assistance from the IRS with regards to paying tax debt. It is a two-page form that is quite easy to fill out with the help of a seasoned Dallas tax lawyer. The Form helps the IRS look into your income and assets with a view to determine the feasibility of you paying what you owe. In the event that a taxpayer is truly unable to pay what they owe in full, the IRS prefers collecting over time to pressing you for the full amount, penalties, and interest. There are a variety of debt relief options that result in the debt being either frozen or reduced.

Things to Remember

  • Every piece of information must have the backing of documentation
  • You must provide honest, accurate information

Related Blog Post: Notable Dos and Don’ts When Applying for IRS Penalty Abatement

What Goes into the Forms?

  • For a wage earner or self-employed person filling out the IRS Form 433 F, the IRS will want to know about your assets and lines of credit including things such as Food, Clothing, Personal care, Transportation, Health insurance, Medical expenses, Utilities, Rent/mortgage, Childcare costs, and Court-ordered payments.
  • For a business filling out Form 433 B or individual filling out Form 433 A, some of the information the IRS will want to know includes Net business income, Rental income, Wages, Gross receipts, Inventory costs, Repair costs, and Dividends.

Last Word

It is important to take immediate action regarding any unfiled or unpaid taxes. The best way to proceed is to secure the help of an IRS debt relief lawyer. When looking for a seasoned Dallas tax lawyer, talk to The Law Offices of Nick Nemeth. We have a wealth of experience serving the Dallas community by helping resolve all sorts of tax problems. To get a FREE no-obligation consultation, call (972) 627-4705 or fill out our contact form.

IRS Debt Relief: How The IRS Assesses Your Ability to Pay
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