What Form 433-B Is For

Form 433-B is a detailed financial disclosure form that businesses use to show the IRS their complete financial picture when they owe back taxes but can't pay the full amount right away. Think of it as a financial snapshot of your business—it tells the IRS about everything your business owns, owes, earns, and spends each month. The IRS uses this information to determine what payment arrangements your business can realistically afford, whether that's a payment plan, an offer to settle for less than you owe, or even temporarily delaying collection if your business is in financial hardship. IRS.gov

This form is required for various types of business entities including partnerships, corporations, S corporations, exempt organizations, and limited liability companies (LLCs). Unlike Form 433-A which is for individuals, Form 433-B focuses specifically on business finances—including business bank accounts, equipment, inventory, accounts receivable, and monthly business income and expenses. IRS.gov

When You’d Use Form 433-B (Including Late or Amended Situations)

You'll typically need to complete Form 433-B when you contact the IRS about an outstanding tax debt and propose a payment solution. Common scenarios include:

• Setting up an installment agreement (payment plan) when you can't pay your tax bill in full
• Submitting an Offer in Compromise (OIC) to settle your debt for less than the full amount owed—in this case, you'd use the special version called Form 433-B (OIC)
• Requesting Currently Not Collectible status when your business cannot pay anything toward the debt right now
• Responding to IRS collection notices when the IRS requests financial information during collection proceedings

The form itself isn't "filed late" or "amended" in the traditional sense—it's submitted whenever the IRS requires current financial information to evaluate your situation. However, if your financial circumstances change significantly after submitting Form 433-B (such as a major decrease in income or new business debts), you should notify the IRS and may need to submit an updated form with current information. The IRS bases payment arrangements on your present ability to pay, so providing accurate, up-to-date information is crucial. IRS.gov

Key Rules and Requirements

Completeness Is Mandatory

Every section must be filled out completely or marked "N/A" (not applicable). Incomplete forms will be rejected or cause significant delays in resolving your account. This isn't optional—the IRS needs a full financial picture to make informed decisions. IRS.gov

Documentation Requirements

After reviewing your completed form, the IRS will likely request supporting documents to verify what you've reported. Be prepared to provide bank statements, profit and loss statements, loan documents, business tax returns, accounts receivable aging reports, and bills for recurring expenses. Having these ready speeds up the process. IRS.gov

Signature Under Penalty of Perjury

A partner, corporate officer, or LLC member must sign the form certifying that all information is true, correct, and complete. This signature carries legal weight—providing false information can result in penalties or criminal prosecution.

Current Information Required

The form asks for your most recent financial data, typically covering the prior 3, 6, 9, or 12 months to establish typical income and expenses. Using outdated information may result in the IRS requesting an updated form.

All Assets Must Be Disclosed

You must list all business assets including cash on hand, bank accounts (even those with zero balance), accounts receivable, investments, real property, vehicles, equipment, and intangible assets like patents and trademarks. This includes foreign accounts and assets. IRS.gov

E-Commerce and Digital Accounts

Modern businesses must disclose mobile payment accounts (PayPal, Venmo), virtual currency holdings (Bitcoin, Ethereum), digital payment processors, and online auction accounts. The IRS has updated the form to capture these 21st-century assets. IRS.gov

Step-by-Step (High Level)

Section 1: Business Information

Start with the basics: your business name, address, Employer Identification Number (EIN), type of business entity, and contact information. You'll also indicate whether you use electronic payment systems and whether your business conducts e-commerce or accepts credit cards.

Section 2: Business Personnel and Contacts

List all partners, officers, LLC members, and major shareholders, including their ownership percentages, salaries, and whether they're responsible for depositing payroll taxes. This helps the IRS understand who controls the business finances.

Section 3: Other Financial Information

Answer critical questions about your business situation: Do you use a payroll service? Are you involved in any lawsuits? Have you filed for bankruptcy? Have you transferred any business assets in the past 10 years? Has anyone connected to the business borrowed money from it? These questions help the IRS identify potential issues or complications. IRS.gov

Section 4: Business Assets and Liabilities

This is the most detailed section. You'll list every asset your business owns or leases: cash on hand, bank accounts, accounts receivable, investments (including cryptocurrency), available credit, real property, vehicles, equipment, inventory, and intangible assets. For each asset, you'll provide current values, loan balances, monthly payments, and equity. You'll also list business liabilities like notes and judgments. IRS.gov

Section 5: Monthly Income and Expenses

Select a representative time period (3, 6, 9, or 12 months) and provide your average monthly business income and expenses. Income sources include gross receipts from sales, rental income, interest, and dividends. For expenses, list only allowable business expenses necessary for operations—you cannot include non-cash expenses like depreciation. The IRS uses this section to determine your monthly net income and what you can afford to pay. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Leaving sections blank

Many businesses skip questions they think don't apply rather than writing "N/A." This causes the IRS to return the form as incomplete. Solution: Read each question carefully and either provide the information or write "N/A" in every blank space.

Mistake #2: Failing to include e-commerce and digital assets

Businesses often forget to list PayPal accounts, cryptocurrency holdings, or merchant account receivables. Solution: Review all digital payment platforms, virtual wallets, and online accounts your business uses and include them in the appropriate sections.

Mistake #3: Understating income or overstating expenses

Some businesses minimize income hoping for better payment terms, but this can backfire when the IRS compares your Form 433-B to your tax returns and bank statements. Solution: Be completely honest and accurate. The IRS will verify everything you report, and discrepancies damage your credibility.

Mistake #4: Including non-allowable expenses

Businesses sometimes list depreciation, depletion, or bad debts as monthly expenses, but the IRS doesn't allow "non-cash" expenses on Form 433-B. Solution: Only include actual cash expenditures necessary for business operations. IRS.gov

Mistake #5: Using outdated financial information

Submitting six-month-old bank statements or last year's profit and loss statement won't cut it. Solution: Gather your most recent financial documents before starting the form—ideally from the past 30–60 days.

Mistake #6: Forgetting to sign

An unsigned form cannot be processed. Solution: Ensure an authorized officer, partner, or LLC member signs under penalty of perjury before submission.

Mistake #7: Not gathering supporting documents in advance

Waiting until the IRS requests verification causes delays. Solution: Assemble bank statements, loan documents, financial statements, and tax returns before submitting Form 433-B so you can respond quickly to verification requests.

What Happens After You File

Review and Verification

An IRS collection officer or agent will review your form and compare it against your tax returns and other information they have on file. They'll look for inconsistencies, missing information, or red flags. In most cases, they'll request supporting documentation to verify the assets, income, expenses, and liabilities you've reported. IRS.gov

Document Requests

Be prepared to provide additional verification such as recent bank statements (typically 3–6 months), profit and loss statements, balance sheets, accounts receivable aging reports, loan statements, lease agreements, and invoices for major expenses. Respond promptly to these requests—delays can cause your proposed arrangement to be denied.

Financial Analysis

The IRS will perform a detailed financial analysis to determine your business's ability to pay. They'll calculate your monthly net income (income minus allowable expenses) and evaluate your business equity in assets. This analysis determines what payment arrangement you qualify for.

Decision and Next Steps

Based on their analysis, the IRS will:

• Approve an installment agreement with monthly payments based on your ability to pay
• Accept or reject an Offer in Compromise if you're trying to settle for less than the full amount
• Approve Currently Not Collectible status if your business truly cannot pay anything right now
• Request additional information if they need clarification or more documentation
• Propose alternative arrangements if your initial proposal isn't acceptable

Ongoing Monitoring

If you're granted a payment arrangement, the IRS may periodically review your financial situation to ensure it hasn't improved significantly. You're also required to stay current on all future tax filings and payments while in a payment agreement.

The entire process typically takes 30–90 days from submission to final decision, though complex cases can take longer. IRS.gov

FAQs

1. Is Form 433-B the same for everyone, or are there different versions?

There are two main versions: the standard Form 433-B for payment plans and collection actions, and Form 433-B (OIC) specifically for Offer in Compromise applications. The OIC version includes additional calculations to determine the minimum offer amount the IRS will accept. Make sure you use the correct version for your situation. IRS.gov

2. Do I need Form 433-B if I'm an individual with self-employment income?

No—if you're operating as a sole proprietor reporting business income on Schedule C of your personal tax return, you'll use Form 433-A (for wage earners and self-employed individuals) instead. Form 433-B is only for formal business entities like partnerships, corporations, and LLCs. IRS.gov

3. What if my business financial situation changes after I submit Form 433-B?

Contact the IRS immediately if you experience significant financial changes—either improvements or further hardships. Major changes like losing a large customer, taking on new debt, or receiving an unexpected windfall can affect your payment arrangement. The IRS may require you to submit an updated Form 433-B reflecting your new circumstances.

4. Can I negotiate with the IRS about what expenses they allow?

The IRS has specific standards for allowable business expenses—generally, expenses must be ordinary and necessary for business operations. While you can't negotiate the fundamental rules, you can provide justification for expenses that might seem unusually high but are legitimate for your industry or situation. Documentation is key to supporting your position.

5. How far back does the IRS look at financial information on Form 433-B?

The form asks about your typical monthly income and expenses over the past 3, 6, 9, or 12 months. However, Section 3 asks about asset transfers within the past 10 years and any bankruptcy filings. The IRS is looking for both current ability to pay and any signs that assets have been moved to avoid collection. IRS.gov

6. What happens if I don't submit Form 433-B when the IRS requests it?

Failing to submit the form when requested can result in the IRS taking enforced collection actions such as filing tax liens, issuing levies on your bank accounts or accounts receivable, or seizing business property. If you're unable to complete it by the deadline, contact the IRS immediately to request an extension and explain your situation.

7. Will completing Form 433-B stop collection actions like levies or liens?

Submitting Form 433-B doesn't automatically stop collection actions, but it does show you're cooperating with the IRS to resolve your debt. If you're working toward an agreement, the IRS may suspend certain collection activities while they review your information. However, they can still file liens or take other actions if they believe you're not acting in good faith or if assets are at risk.