Verified Financial Installment Agreement

verified financial installment agreementIf you owe over $25,000 as a business or $50k as an individual, Installment Agreements are more difficult to obtain but they are not impossible. The IRS is much stricter with Installment Agreements above $25,000 because typically they want to assess how much you can afford and what assets they can liquidate to resolve any tax debt. This is assessed or done by making your financial situation (assets, income and expenses) transparent to the IRS with the use of a Collection Information Statement or Form 433 (Form 433-A is for individuals, Form 433-B is for businesses, although IRS has been using Form 433-F too). A Verified Financial Statement Installment Agreement is very similar to a Streamlined IA, except with with a Verified Financial Statement IA, it is generally for tax debt above $25k and you need to verify your income. It is highly recommended that you use a tax professional or CPA here.

Some Requirements for a Verified Financial Statement

  1. You must have completed your tax return and tax returns from previous years.
  2. Over 25k as a business and  now 50k as an individual in combined IRS tax debt, penalties and interest.
  3. Form 433 A or Form 433 B (if business) – The Collection Information Statement.
  4. 9465 – Installment Agreement Request.
  5. Cannot be in Bankruptcy or had an Offer In Compromise accepted.
  6. Must have had payment compliance in the past with the IRS.
  7. No IRS income tax Installment Agreements in the last 5 years. There are exceptions where sometimes new problematic tax liabilities can be rolled into an existing Installment Agreement you may have.
  8. You don’t have adequate money in savings, bonds, investments, and retirement accounts to pay taxes off and you can’t borrow the money

How To File A Verified Financial Installment Agreement

  1. First print and complete IRS Form 433-F (or B for businesses) which is called the Collection Information statement. You will need your Social Security number or TIN, Spouse’s SS# or TIN (if applicable), address, and phone numbers as well as supporting documentation for expenses and income with Form 433-F. Some IRS Automated Collection System Agents may request 433-A but for now you can skip this since the IRS site asks specifically for form 433-F.
  2. Directions For Form 433-F (Collection Information Statement)
    • Complete Part A, B, and C. Part A or Accounts and Lines of Credit. List all financial accounts, IRAs, 401ks, Brokerage Accounts, etc. You will need to show at least the last 90 days of statements for these accounts. For Part B, Real Estate, list your properties, timeshares etc and show what you pay per month, any income you get from it, and what remaining equity is on those loans. Other Assets go in Part C such as any automobiles, boats, or other major vehicles and life insurance policies. Again, for Part C, like Part B, show what you paid for each asset, what the monthly payment is, how much equity you have with the asset, and what the current value is of the asset (for example, a boat typically depreciates like a car).
    • Complete Part D- Credit Cards. Just list all the credit cards and charge cards you have, and the balances if any on each one. Also disclose what your monthly payments (minimums) are for each type of card.
    • Complete Part E-F – This is where you should detail out your income and your spouse’s (if any). You will need to shop copies of pay stubs from your employers including their address and detail out how frequently you get paid. Again, 3-4 months of pay stubs should be fine. Every type of income (when you get money) needs to be listed (eg. social security, income from a rental house).
    • For Part G and H – Explain what you need to live on and fill in the amount of dependents you have. This means estimating monthly expenses for things like, rent, food, transportation, mortgages, student loan payments, medical bills and more. Again, you need to show proof here so you will need copies of bills or statements that pertain to these expenses for the last three months.
    • Double check the form, sign and date it (along with your spouse if applicable) as you will need to send it to the address on the bill. *Some IRS officers will ask for Form 433-A for wage earners or Form 433-B for businesses, and they will request it from you if necessary.
  3. Next print and fill out Form 9465, the Installment Agreement Request or call 1-800-829-1040 to have it mailed to you. The directions on Form 9465 will give you guidance with completing it. Include your user fee ($52 if direct debt and $150 if not). Make sure to include your first month’s payment with your user fee. If you fail to pay a certain month, then you need to pay a reinstatement fee of $45 with the IRS.
  4. Send Form 9465 with your tax return (1040), including your completed 433-F form, and send it to the IRS. If you efile your return, then send payment and form 9465 and 433-F to the IRS. Here, you can double check the appropriate IRS address.