Gary Bode, CPA: If you're a company, Form 433-B is required to submit an Offer in Compromise. If you'd like a free initial phone consult, please call 399-2705.
Form 433-B,Collection Information Statement for Businesses
Corporations, Partnerships and LLCs submit IRS Form 656 to request an Offer in Compromise. Sometimes, you can pay “pennies on the dollar” to satisfy IRS back taxes. A required attachment is Form 433-B, which presents the IRS with your company’s version of its current financial condition and future earning potential. Current Financial Statements shouldn’t be used as a substitute.
Here are links to previous posts:
- Forms 433-B and 656.
- Offer in Compromise as a solution to back taxes.
- Offer Mills.
Directions for Form 433-B to supplement Form 656
Essentially there are none. Form 433-B is considered self-explanatory. Here are the only IRS instructions, a single paragraph in their 656-B, which explains an Offer in Compromise and includesForm 433-B and Form 656.
Fill out the Form 433-B(OIC) if your business is a Corporation, Partnership, Limited Liability Company (LLC) classified as a corporation, single member LLC, or other multi-owner/multi-member LLC. This will be used to calculate an appropriate offer amount based on your business assets, income, expenses, and future earning potential. If you have assets that are used to produce income (for example, a tow truck used in your business for towing vehicles), you may be allowed to exempt the equity in these assets.
Some rules of thumb include:
- Make sure there are no gaps on Form 433-B. Enter zeros or N/A as appropriate.
- Remember the IRS audits Form 433-B. Falsifying information would negate an Offer in Compromise.
- Carefully explain anything that’s not a standard component of an Offer in Compromise.
- Proactively provide supplemental documentation to support components of Form 433-B.
- CPAs recognize round numbers as estimating. Take the time to get an accurate figure.
There are Different Ways to tell an Accurate Story
There is some wriggle room on Form 433-B. With enough time, it may be possible to structure the company’s future condition to tell a different story.
Does the IRS provide additional information on Income Producing Assets?
Yes, in IRM 5.15.1.18.
What are “Distrainable Assets” mentioned at the end of Form 433-B?
Distrainable assets is IRS doublespeak for business assets the IRS can seize to pay off outstanding business tax liability.
Remember your Rights as a Taxpayer
At anytime during interaction with the IRS, you can request to consult with your CPA and the interview will be adjourned.
We’re a Wilmington NC CPA Firm
But we serve a broad geographic base. We offer a free initial phone consult at (910) 399-2705 .
