What to Expect When Settling Tax Debt
If you owe the IRS, it is always better to go to them than to wait for them to come to you. You can certainly make the call yourself, but if you want to avoid their infamous wait times, you can hire a qualified third party to do it on your behalf. Professional tax relief services can often provide a solution that’s better from all angles. Whatever route you choose, the IRS will still be dictating most of the resolution process, so it is valuable to be aware of what may be coming your way in terms of forms. The IRS will use one of several form variations to determine your ability to pay and your eligibility for a payment plan.
No matter which form you end up having to fill out, you should take the proactive step of keeping organized documentation for all aspects of your finances. Verification is a large part of all interactions with the IRS, and having receipts on-hand will make things much less stressful.
If you earn wages or are self-employed, you may be given Form 433-A. Some of the determining conditions for this form include having payroll debt, mixing personal and business expenses, or having a particularly high degree of debt. The information required of you by this form includes:
- Identification: SSN, Driver’s License, etc.
- Lawsuits, trust funds, life insurance
- Assets, both personal and business
- Monthly living expenses and business income (or self-employment expenses)
- Financial documentation: Pay stubs, bank and credit card statements, etc.
The IRS will determine your particular monthly living expenses for the time period in which you are paying off your debt. Therefore, you will be required to provide the following information regarding your necessary expenses:
- Food, clothing, etc.
- Housing, utilities
- Personal vehicle, public transport
- Health insurance, out-of-pocket healthcare
- Current taxes, secured debts
- Court-ordered payments
If you own a business, and that business has a tax debt, then you will likely be given Form 433-B. The business information required for this form includes:
- Name, type, establishment date, number of employees, internet sales, and contact info
- Key individuals
- Assets and liabilities
- Lawsuits, debts, bankruptcy proceedings
- Monthly income and expenses
Form 433-F is a simplified version of Form 433-A, and is generally assigned in cases handled by the IRS Automated Collections Service. The information required of you by this form includes:
- Contact, SSN, Employment
- Bank accounts, credit lines, cards, and amount owed, mutual funds
- Business info (if applicable)
- Monthly living expenses
- Total household income (excluding wages)