"We first selected Gary Bode because of his familiarity with a creative financing scheme for our new small business. During our time with Gary, his insights have helped us better structure our small businesses, save money, and learn to be better small business managers. When it comes to small business accounting, a little hand-holding goes a long way."—Justin and Joelle LeBlancGary 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.
Offer in Compromise CPAs prepare Form 433-B, Collection Information Statement for Businesses, for Corporations, Partnerships and LLCs as an attachment to IRS Form 656.
Hi, I’m Gary Bode, a Form 656 CPA with a virtual office to handle your Offer in Compromise, regardless of where you live. The IRS recently relaxed Offer in Compromise qualifications as part of their Fresh Start program. Sometimes, you can pay “pennies on the dollar” to satisfy 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.
Here are links to earlier 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 includes Form 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 for Form 433-B preparation:
- 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.
- Current Financial Statements shouldn’t be used as a substitute for Form 433-B.
There are Different Ways to tell an Accurate Story for an Offer in Compromise
There is some wiggle room on Form 433-B. With enough time, it may be possible to proactively structure the company’s future condition to tell a different story. Think about an Offer in Compromise like a chess game and plan four moves ahead.
Does the IRS provide more 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 doublespeak for business assets the IRS can seize to pay off outstanding business tax liability.
We’re an Offer in Compromise CPA firm that deals with Form 656 and Form 433-B. We offer a free initial phone consult at (910) 399-2705 .
Find me on Google+
