Installment Agreements for Tax Pros: IRS Form 9465 and Form 433

Mastery over the tools of the trade is paramount for anyone working in the specialized, complex area of tax resolution. For expert tax professionals, this means cultivating an awareness of the many IRS forms available and knowing when and how to deploy them with precision. The right IRS form can be the linchpin to a successful resolution, saving clients from prolonged disputes and financial strain. A grasp of two forms, in particular, is critical – IRS Form 9465 and IRS Form 433. This article offers an in-depth exploration of these forms, tailored for emerging and experienced tax professionals.

IRS Form 433: The Financial Microscope

The primary role of IRS Form 433, the Collection Information Statement for Wage Earners and Self-Employed Individuals, is to serve those who are seeking alternative payment arrangements or settlements. It’s like a financial microscope designed to give the IRS a detailed look into a taxpayer’s financial life. In essence, when a taxpayer submits Form 433, they present a complete declaration of their financial standing.

Taxpayers are expected to detail their income streams, which can range from regular salaries to more complex investment returns. Additionally, they must outline their monthly expenses, capturing everything from significant commitments like mortgages to everyday living costs. The form also necessitates a thorough inventory of assets. This isn’t limited to just tangible properties and vehicles but extends to financial instruments like stocks and bonds. Taxpayers must also declare their outstanding liabilities, encompassing everything from personal loans and mortgages to credit card debts.

There are four versions of Form 433. IRS Forms 433-A, 433-B, 433-F, and 433-H each serve a distinct purpose and are used in different situations. Here’s a breakdown of the differences between these forms:

1. Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals):
   • Purpose: This form is used to collect financial information from individual taxpayers who owe taxes and are seeking alternative payment arrangements, such as an installment agreement or an Offer in Compromise.
   • Who Uses It: Wage earners and self-employed individuals.
   • Information Required: Detailed financial information, including income, expenses, assets, and liabilities. It provides a comprehensive view of the taxpayer’s financial situation.
   • When It’s Used: When an individual owes a significant amount of tax and is trying to negotiate a payment plan or settlement with the IRS.     
          
2. Form 433-B (Collection Information Statement for Businesses):
   • Purpose: Similar to Form 433-A, but specifically tailored for businesses.
   • Who Uses It: Businesses that owe taxes to the IRS and are seeking alternative payment arrangements.
   • Information Required: Detailed financial information about the business, including income, expenses, assets, and liabilities.
   • When It’s Used: When a business owes tax and is trying to negotiate a payment plan or settlement with the IRS.
     
     
3. Form 433-F (Collection Information Statement):
   • Purpose: A shorter, more streamlined version of the 433-A form. 433-F is used to quickly gather basic financial information from taxpayers.
   • Who Uses It: Individual taxpayers can use this form.
   • Information Required: Basic financial details, such as income, expenses, and key assets and liabilities.
   • When It’s Used: Often used in situations where the IRS needs a quick overview of a taxpayer’s financial situation or when the amount owed isn’t as substantial.
     
     
4. Form 433-H (Installment Agreement Request and Collection Information Statement for Individuals):
   • Purpose: IRS Form 433-H, or Installment Agreement Request and Collection Information Statement, is one of the many IRS documents that allows taxpayers to request tax relief when they cannot reasonably afford to pay what they owe in taxes
   • Who Uses It: wage-earning employees can fill out a request for an installment agreement in the case that their tax debt exceeds $50,000 or cannot be paid within the next 72 months or six years.
   • Information Required: Financial details similar to the 433-A.
   • When It’s Used: When a taxpayer owes less than $50,000 tax and wishes to set up an installment agreement with the IRS.

Through the information provided on Form 433, the IRS is able to fully assess a taxpayer’s genuine ability to settle their owed taxes. This form is pivotal when negotiating installment agreements, trying to get your client put into an uncollectible status, or even when submitting an Offer in Compromise on behalf of a client. Its importance is further magnified in situations where the amount owed is not just a minor sum but a significant liability. Many times, a taxpayer’s financial situation is layered and multifaceted. The insights provided by Form 433 can be the difference between a successful resolution and a prolonged, challenging dispute. In a precarious financial situation, Form 433 is more than a formality. It’s the tool through which a taxpayer can negotiate a feasible payment plan with the IRS, ensuring resolution and setting the stage for future stability.

Given the depth and complexity of all the Form 433 variations, it’s not a form that should be approached lightly. It’s best handled by those with seasoned expertise in the field. With their specialized training and experience, tax resolution specialists are particularly adept at navigating its intricacies. Similarly, Certified Public Accountants (CPAs) and Enrolled Agents, with their deep understanding of financial landscapes and IRS requirements, are well-equipped to guide taxpayers through the Form 433 process. The right tax resolution software supports this work. Using the data that the client has already supplied, the sophisticated IRS Solutions platform can toggle between Form 433-A, Form 433-A (OIC), or even Form 433-F without re-entering any data. The right software will also assist you in your decision if your client qualifies for an Installment Agreement and Currently Not Collectible status or possibly even an Offer in Compromise.

IRS Form 9465: The Bridge to Financial Reprieve

Amid the extensive library of forms and government paperwork, IRS Form 9465, the Installment Agreement Request, emerges as a beacon of hope, acting as a bridge to financial relief for many taxpayers. At the heart of Form 9465 lies a simple yet profound intent: It represents a taxpayer’s earnest plea to the IRS. Through this form, they are seeking a compassionate extension and a bit more time to settle their tax debts. This is not a blind ask; it’s a structured proposal to repay the debt through manageable monthly installments, ensuring that the taxpayer’s intent is clear and their commitment to settling their debt is evident. Taxpayers who owe $50,000 or less and who believe that they can settle their outstanding amounts without plunging into further financial distress or causing undue hardship to their families often turn to this form or request this online. 

When every dollar counts and financial stress looms large, IRS Form 9465 offers taxpayers a structured way to request a feasible payment plan with the IRS, ensuring they get the breathing space they so desperately need through an installment agreement without the looming threat of punitive actions. Several types of installment agreements are available to taxpayers, each tailored to specific situations:

Guaranteed Installment Agreement

• • For individuals who owe $10,000 or less (excluding penalties and interest).
  • Taxpayers must have filed previous tax returns.
  • The debt must be paid off within three years.
  • The IRS is required to accept this agreement if the taxpayer meets all the necessary criteria.

Streamlined Installment Agreement

• • For individuals who owe $50,000 or less and businesses that owe $25,000 or less in payroll taxes.
  • The debt must be paid off within 72 months or before the collection statute expires.
  • No financial statement is required, making the process simpler and faster.
  • Taxpayers must be in compliance with other tax filing and payment requirements.

Partial Payment Installment Agreement (PPIA)

• • Allows taxpayers to make monthly payments towards their debt, but the payments may not necessarily pay off the full amount owed.
  • The remaining debt might be forgiven after the expiration of the collection statute.
  • Requires a detailed financial statement, and the IRS may review the taxpayer’s financial situation every two years, potentially leading to an increase in the monthly payment amount.

Non-Streamlined Installment Agreement

• • For taxpayers who owe more than the limits set for streamlined agreements or need longer than 72 months to pay.
  • Requires a more detailed financial review, including submission of Form 433-A, Collection Information Statement.
  • The terms are based on the taxpayer’s ability to pay.

Payroll Deduction Agreement

• • Allows taxpayers to make installment payments directly from their payroll checks.
  • Requires the submission of Form 2159, Payroll Deduction Agreement.

Long-Term Installment Agreement

• • For taxpayers who need longer than the standard agreement terms to pay off their debt.
  • Typically requires a more detailed financial review.

The IRS Form 9465 primarily requires basic details about the taxpayer, a clear indication of the amount owed, and a proposed monthly payment based on the taxpayer’s sincere assessment of what they believe they can consistently afford over the repayment period. While the form’s simplicity might tempt many taxpayers to venture into filling it out independently, it’s a journey best undertaken with an expert guide. With their nuanced understanding of IRS expectations and a keen sense of financial strategies, tax professionals can be invaluable in this process. Their knowledge and experience ensure that the proposed repayment plan is realistic and aligns with both parties’ best interests, increasing the likelihood of IRS approval.

Maximizing Form Success with IRS Solutions® 

In the ever-evolving world of tax resolution, the tax code isn’t the only thing that changes. The tools that tax pros use to serve their clients do, too. The best way to provide the greatest number of clients with the highest level of service in the fewest hours at your desk is by staying up to date with the latest technology. There is a wide range of tax resolution platforms available, and they are not all the same. 

IRS Solutions® is not just another tax prep tool; it’s a comprehensive membership organization that provides tax professionals with everything they need to earn more in less time with a specialty in the rewarding field of tax resolution. What makes IRS Solutions® different from other companies like Pitbull and Canopy? 

A meticulously crafted, intuitive platform built by tax pros for tax pros. Determine if an installment agreement is the right solution for your client with:

• Full Tax Analysis Reports – Generate fully customizable, comprehensive, and detailed client reports. Access and exchange information about income and expenses, tax owed, collection alternatives, and much more.
• Solution Recommendations: The IRS Solutions platform will analyze your client’s data and IRS transcript to recommend the solution (Installment Agreement, Offer in Compromise, or Currently Not Collectible status) that is most likely to be accepted by the IRS. This platform feature is especially beneficial to anyone just getting started in tax resolution, but even the most experienced professionals find it invaluable.
• IRS Advance Notice™ (IAN) – IAN is your secret weapon, peering into the IRS system 24/7, constantly monitoring your clients’ transcripts, automatically alerting you to changes, including impending audits and passport forfeitures, and giving you the lead time you need to prepare an effective defense.

Tax resolution is both an art and a science. With the right knowledge, tools, and forms, tax professionals can craft solutions that truly make a difference in their clients’ lives. IRS Solutions® is your partner on that journey. Experience the transformative difference firsthand. Schedule a demo today.