IRS Form 433-B Instructions: Assets, Income, and Filing

To fill out IRS Form 433-B, the Collection Information Statement for Businesses, you pick the right version of the form, gather the documents that back up every figure, and report your business’s assets at quick sale value and your expenses as actual monthly cash outlays. The IRS uses the resulting picture to decide whether your business qualifies for an installment agreement, currently-not-collectible status, or an offer in compromise.¹ Getting the numbers right the first time is the single best way to avoid drawn-out back-and-forth with a Revenue Officer.

Pick the Right Version First

There are two versions of this form, and filing the wrong one means starting over. Use the standard Form 433-B if the business is requesting an installment agreement or asking the IRS to temporarily delay collection because it cannot afford to pay right now.² Use Form 433-B (OIC) if you plan to submit an Offer in Compromise; that version has additional fields that feed directly into the offer calculation.³ The two look similar on the surface, so confirm the version before you begin.

One prerequisite matters before either version is worth submitting: the business must be current on all filing requirements and estimated tax payments, and payroll deposits need to be on time. If returns are missing or deposits are behind, the IRS will send you back to fix that first.⁴

Gather Your Documentation Before You Start

Every figure on Form 433-B needs backup. Pulling documents together up front saves hours and reduces follow-up requests. You’ll want:

At least six months of bank statements for every business account, plus three months of statements for each investment account. The OIC version explicitly requires this, and a Revenue Officer working the standard form will ask for the same thing.³
A profit and loss statement covering a period that reflects normal operations. IRS Publication 5059 suggests 3, 6, 9, or 12 months, whichever best represents typical income and expenses.¹
The most recent balance sheet, to cross-reference assets and liabilities.
Loan documents: mortgages, equipment loans, lines of credit, any other financing.
Real estate deeds and vehicle titles, to verify ownership and equity.
An accounts receivable aging report showing what customers owe and how collectible those receivables are.
Depreciation schedules. Depreciation doesn’t count as a monthly expense on the form, but the IRS uses the schedules to verify asset values.³

Section 1: Business Information

The opening section is straightforward identification: business name, street and mailing addresses, phone, type of business, website, EIN, entity type, and date the business was established or incorporated.⁵

A few fields catch people out. If the business is an LLC, indicate whether it’s classified as a corporation or a different type of LLC and provide the number of members. The form also asks for employee headcount, monthly gross payroll, how often you deposit employment taxes, and whether the business is enrolled in the Electronic Federal Tax Payment System (EFTPS). If the business accepts credit cards, list each card type, the merchant account number, and the issuing bank.⁵

Section 2: Business Personnel and Contacts

For each partner, corporate officer, LLC member, or major shareholder, enter full name, title, home address, phone numbers, taxpayer identification number, ownership percentage, and annual salary or draw.⁵ The form also asks which of these individuals is responsible for depositing payroll taxes.

Answer that last question carefully. The IRS uses this section to identify targets for the trust fund recovery penalty. If payroll taxes are part of the liability, anyone flagged here as responsible for deposits may face personal liability. The salary and draw figures matter for a separate reason: the IRS will evaluate whether owner compensation is reasonable given the business’s revenue and outstanding tax debt.

Section 3: Other Financial Information

Section 3 asks questions many business owners don’t expect. The IRS wants to know whether the business is involved in lawsuits, has ever filed bankruptcy, has related parties who owe it money, and whether any assets have been transferred for less than full value in the last ten years.⁵

The asset transfer question is the sensitive one. If the business sold equipment, vehicles, or real estate to an insider at below-market price in the past decade, the IRS will want details. Transfers for less than fair market value can be reversed or counted as available equity when calculating what the business can pay. The form also asks about affiliations such as subsidiary or parent companies and whether you expect income to increase or decrease.⁵ An honest answer about declining revenue can actually help your case by supporting a lower payment amount.

Section 4: Business Assets and Liabilities

This section takes the most time and carries the most weight. List every asset the business owns: cash on hand, bank balances, accounts receivable, inventory, vehicles, equipment, real property, and any other investments or assets of value.

Quick Sale Value, Not Market Value

What you paid for an asset doesn’t matter. What matters is the quick sale value, defined as the price the business could get if it had to sell the asset within roughly 90 days. The IRS normally calculates quick sale value at 80 percent of fair market value, though a Revenue Officer can adjust that percentage based on the type of asset and current market conditions.⁶ In a hot real estate market, the IRS might set quick sale value equal to full market value.

For each asset with an outstanding loan, list the current loan balance. The difference between quick sale value and loan balance is the net equity, and that equity figure is what the IRS counts as available to pay the tax debt. A piece of equipment worth $50,000 with a $35,000 loan balance has a quick sale value of $40,000 (80 percent of $50,000), leaving net equity of $5,000.

Liabilities

After assets, list all creditors. Cross-reference secured debts (real estate mortgages, equipment loans) with the specific assets they’re attached to. List unsecured debts such as credit card balances and vendor invoices separately with creditor name and current balance. The IRS compares total liabilities against total assets to calculate net worth, which feeds directly into the collection analysis.

Section 5: Monthly Income and Expenses

This section ultimately determines your monthly payment amount. It shows the IRS how much cash the business has left over each month after paying necessary operating costs.

Averaging Monthly Income

Choose a time period that reflects typical operations. Publication 5059 suggests 3, 6, 9, or 12 months, whichever gives the most representative picture of normal revenue.¹ If one quarter was unusually strong because of a one-time contract, a 12-month average produces a more accurate number. Report total gross receipts, then subtract returns or allowances to arrive at gross income.

On the OIC version, you’ll also calculate cost of goods sold to determine true gross profit.³ The standard form may not break it out that way, but having the calculation ready shows the Revenue Officer how your margins work.

Reporting Monthly Expenses

List every operating expense as a monthly figure, even if the business pays it quarterly or annually. Divide an annual insurance premium by 12; divide a quarterly estimated tax payment by 3. Common allowable expenses include rent, utilities, insurance, payroll, vehicle costs, and supplies.

Two rules trip people up. Only actual cash outlays count, so non-cash accounting entries like depreciation and amortization stay off this section because they don’t represent money leaving the business. And unlike individual taxpayers, who are measured against national and local expense standards, business expenses are judged on whether they’re actually necessary to operate the business.⁷ A Revenue Officer can and will question any expense that looks excessive.

Owner compensation gets the closest look. If you’re drawing $15,000 a month from a business that grosses $40,000, expect pushback. The draw needs to be justifiable based on the business’s size, industry, and what it actually takes to keep the owner engaged.

Net Monthly Income

Subtract total monthly expenses from total monthly income. The remainder is what the IRS considers available to pay down the tax debt. Zero or negative may qualify the business for currently-not-collectible status, meaning the IRS temporarily stops collection until finances improve.² A positive balance becomes the basis for a monthly installment payment.

How the Numbers Turn Into a Payment

For installment agreements, the IRS takes the monthly surplus and multiplies it across the months remaining in the collection statute, generally 10 years from assessment. If that total covers the full liability plus interest and penalties, you’ll get a full-pay installment agreement. If it falls short, you may qualify for a partial-pay agreement, subject to periodic review.

For offers in compromise, the IRS calculates reasonable collection potential: net equity in assets plus anticipated future income minus allowable expenses.⁸ Your offer needs to meet or exceed that figure to be accepted. This is why the Section 4 asset entries and the Section 5 expense entries carry equal weight: understating equity or overstating expenses produces a number the IRS won’t accept, and overstating income does the same thing from the other direction.

Signing and Submitting

Every line needs either a figure or “N/A.” Blank lines invite follow-up questions and delay processing. A corporate officer, partner, or LLC member must sign under penalty of perjury, certifying that the information is true, correct, and complete.¹ That perjury language is real. Understating assets or inflating expenses on purpose is a federal offense, not just grounds for denial.

Submit the completed form with supporting documents (bank statements, profit and loss statements, loan agreements, asset documentation) to the address on your IRS notice or directly to your assigned Revenue Officer. If you’re filing an Offer in Compromise, Form 433-B (OIC) goes with the Form 656 offer package. Expect a review period of several weeks or longer and be ready for follow-up requests on specific entries.

If the IRS Disagrees With Your Numbers

If the IRS disallows an expense, values an asset higher than you did, or proposes a payment the business can’t afford, you have appeal options. The Collection Appeals Program is the fastest: if the IRS rejects, modifies, or terminates an installment agreement, file Form 9423 within 30 calendar days with the office or Revenue Officer that took the action.⁹ A managerial conference first isn’t required but often resolves the dispute.

If you receive a notice of federal tax lien filing or a notice of intent to levy, you have 30 days to request a Collection Due Process hearing using Form 12153.¹⁰ Bring documentation either way. If the IRS valued equipment too high, get an appraisal. If an expense was disallowed as unnecessary, produce contracts or invoices showing why the business can’t operate without it. The businesses that win these appeals show up with numbers, not objections.

1
Internal Revenue Service. IRS Publication 5059 – Instructions for Form 433-B
2
Internal Revenue Service. Temporarily Delay the Collection Process
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Internal Revenue Service. IRS Form 433-B (OIC) – Collection Information Statement for Businesses
4
Internal Revenue Service. Topic No. 202, Tax Payment Options
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Internal Revenue Service. Collection Information Statement for Businesses
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Internal Revenue Service. Internal Revenue Manual 5.8.5 – Financial Analysis
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Internal Revenue Service. Internal Revenue Manual 5.15.1 – Financial Analysis Handbook
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Internal Revenue Service. Topic No. 204, Offers in Compromise
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Internal Revenue Service. Form 9423, Collection Appeal Request Instructions
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Internal Revenue Service. Collection Due Process (CDP) FAQs