Due to the need for complete accuracy when writing Forms 433-A and 433-B, it is useful for new clients to obtain copies of these pre-submitted forms. You can file this application (after the submission of the required power of attorney form) directly with the financial officer handling the case. If no financial officer is assigned, you must file a freedom of information request with the District Disclosure Officer. Form 433-E, Collection Information Statement, must be completed when an individual taxpayer, including a self-employed person, owes more than $50,000 or does not agree to pay by deduction or withdrawal of wages. It asks detailed questions about the taxpayer`s financial situation. The IRS considers the authorized cost of living to determine how much a taxpayer can afford. Completing the form can take many hours and the client may be required to provide verification documents. The IRS Restructuring and Reform Act of 1998, signed on July 22 by President Clinton, contains several provisions that will affect the negotiation and use of instalment agreements. The main one is a greatly expanded right to challenge threatened deposits, thus providing a forum where it can be argued that a instalment payment agreement should be made available to the taxable person as an alternative to enforced recovery measures. After demonstrating current compliance and addressing the issue of solvency through selling or borrowing against assets, you will finally be able to talk about the client`s monthly income and expenses to determine the necessary monthly payment.
This discussion is, however, severely limited by the standardized spending premiums introduced by the IRS in August 1995 to require a more homogeneous analysis of financial information in recovery cases. This system divides expenditures into ”necessary expenditures” and ”conditional expenditures”. The IRS publishes tables based on income level and family size for three categories of necessary expenses: ”standard national expenses,” housing expenses, and transportation costs9 The computational capacity allows for the necessary expenses, whether or not the proposed rate agreement results in full payment in three years. However, conditional expenses are only allowed if the tax debt, including scheduled appeals, can be paid within three years. The IRS Collecting Contact Handbook contains the following discussion of these expense categories: You can calculate your payment based on your disposable income with Form 433. A partial payment plan can be set up for a longer repayment period and the IRS can file a federal tax pledge to protect its interests. You may need to provide pay slips and bank statements to support your application and inject your own funds into your own assets. The terms of the agreement are reviewed every two years if you can make additional payments. While most taxpayers liable to the IRS for tax establish a instalment payment agreement, practitioners should be aware of other options for clients. If a taxpayer is unable to pay a tax debt through an unsinslined agreement, you should file a compromise offer….