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Offer In Compromise

Preparing IRS Form 433-A

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Preparing accurate and thorough IRS Form 433-A is an essential and crucial step in submitting a successful Offer in Compromise application.

Form 433-A, "Collection Information Statement for Wage Earners and Self-Employed Individuals," is the form used to document your unique financial situation. The IRS uses this form to determine your Reasonable Collection Potential on your tax debts. Form 433-A is six-page form. Here's a breakdown of the information reported in each section of Form 433-A.

Form 433-A Section 1: Personal Information

Report your full name, address, telephone number, best time to call, marital status, and Social Security number. You also report all your dependents, their relationship to you, their age, and whether they live with you. You also let the IRS know whether you rent or own your house, or have some other sort of housing arrangement.

Form 433-A Section 2: Business Information

Report the name, address, employer identification number and other information for any businesses that you own. This may be a sole proprietorship, S-Corporation, LLC, or other type of business entity. If you own a business, you will also need to prepare IRS Form 433-B to report financial information about your business.

Attachments required: proof of self-employment income for the prior three months.

Form 433-A Section 3: Employment Information

Report the name of your employer, your work address, work telephone number, how long you have been employed with this company, and your occupation.

Attachments required: proof of wages and deductions for the prior three months. You should keep pay stubs, earnings statements, or other payroll information to document your wages, income tax withholding, and other payroll deductions.

Form 433-A Section 4: Other Income Information

Report other income you receive each month. This may include pensions, annuities, Social Security, child support, alimony, or rental income.

Attachments required: proof of income for the prior three months. You should keep Social Security stubs, pension or annuity statements, copies of child support or alimony checks, or a statement of rental income and expenses.

Form 433-A Section 5: Bank, Investment, Credit, and Insurance Assets

Report all your liquid assets, such as bank accounts, investment accounts, credit card accounts, and insurance policies.

Bank accounts: provide the name and address of your bank branch, along with your bank account number and current balance. Include information on all checking, savings, and money market accounts you own. Include accounts held at banks, credit unions, and savings & loan institutions.

Attachments required: bank statements for the previous three months.

Investment accounts: provide information about stocks, bonds, mutual funds, and other investment assets you own. Include any time deposits, certificates of deposit, IRAs, Keogh, 401k, and annuities. Money market funds should be reported in the bank account section.

Attachments required: brokerage statement showing your holdings, annuity statement showing surrender value, bank statement showing current value and early withdrawal penalty for certificates of deposit, 401k plan statement showing account value and value of outstanding loans.

Cash on hand: provide information about cash you have that is not in a bank account. This includes cash you have in your possession or stored in a safe deposit box.

Credit Card Accounts: provide information about available credit. Report the name, address, credit limit, and current balance on all your credit cards, department store charge cards, and unsecured lines-of-credit. Do not report car loans and mortgages, those will be reported in Section 7.

Attachments required: credit card statements for the prior three months.

Insurance Policies: provide information about the cash value of your whole life or universal life insurance policies. Term life insurance policies do not accumulate cash value, and so they should not be reported here.

Attachments required: statement from your insurance company showing the cash value, loan value, and/or surrender value of your life insurance policy.

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