IRS Form 433-B: A Complete Guide for Businesses Facing Tax Debt

Your business owes back taxes. The IRS is knocking. Now what?

Before the IRS can work out a payment plan, reduce your debt through an Offer in Compromise, or grant a temporary collection delay, they need a complete picture of your company's finances. That's where Form 433-B comes in—and filling it out accurately can mean the difference between a manageable resolution and a rejected application.

This guide walks you through every section of IRS Form 433-B, explains what the IRS is actually looking for, and highlights the mistakes that most commonly derail business owners trying to resolve their tax debt.

What Is IRS Form 433-B?

IRS Form 433-B, officially titled the Collection Information Statement for Businesses, is a financial disclosure document that businesses must complete when negotiating tax relief with the IRS. It gives the agency a detailed snapshot of your company's assets, income, and expenses so they can determine how much you can realistically pay.

The form is used in several collection scenarios:

• Installment agreements — when your business owes more than $25,000 or needs more than 24 months to repay
• Currently Not Collectible (CNC) status — if paying would cause undue hardship
• Offers in Compromise (OIC) — when you want to settle your debt for less than the full amount owed

Note that there are two versions of the form. The standard Form 433-B (Rev. 2-2019) covers most collection situations. The specialized Form 433-B (OIC) (Rev. 4-2025) is required specifically when submitting Form 656 for an Offer in Compromise.

Who Needs to File Form 433-B?

Form 433-B is for business entities—specifically:

• Corporations (C-corps and S-corps)
• Partnerships
• Limited Liability Companies (LLCs)

If you're a sole proprietor, you'll use Form 433-A instead, which covers self-employed individuals and wage earners. The distinction matters—submitting the wrong form can delay your resolution process significantly.

The Seven Sections of Form 433-B

Section 1: Business Information

This section establishes basic facts about your company:

• Legal business name and EIN (Employer Identification Number)
• Physical and mailing addresses, phone number, website, and county
• Type of entity and date the business was established
• Number of employees and gross monthly payroll
• Whether the business is enrolled in EFTPS (Electronic Federal Tax Payment System)
• Payment processors used (PayPal, credit cards, virtual currency wallets)
• Names, Social Security numbers, ownership percentages, and salaries of all partners, LLC members, corporate officers, and major shareholders

The IRS cross-references this information with their own records and public databases. Accuracy here is non-negotiable.

Section 2: Business Asset Information

Section 2 documents the fair market value of all business assets, including:

• Business bank accounts and certificates of deposit
• Investment accounts and virtual currency holdings
• Notes receivable and accounts receivable
• Real estate owned by the business
• Vehicles (business-use)
• Equipment, tools, and other business property

For each financed asset, you'll also need to list the lender, current balance owed, and monthly payment amount. The IRS uses this to calculate your net realizable equity—essentially what the business could access quickly to pay its debt.

Common mistake: Omitting foreign accounts, assets held in another country, or assets technically owned by related entities. The IRS will look for discrepancies.

Section 3: Business Income Information

This section asks for your average gross monthly income over the past 6 to 12 months, broken down by income type.

Strategic tip: You can choose between a 3, 6, 9, or 12-month average to calculate your figures. In most cases, a 12-month average is more advantageous—it smooths out seasonal highs and lows and gives a more accurate picture of normal revenue. A 3-month snapshot taken during your busiest season could overstate your ability to pay.

Alternatively, you can attach a current profit and loss statement to bypass the detailed line items in this section.

Section 4: Business Expense Information

Section 4 asks for average monthly business expenses across categories including:

• Materials and inventory
• Wages, salaries, and payroll taxes
• Rent and utilities
• Vehicle and transportation expenses
• Insurance premiums
• Other recurring obligations

As with income, a P&L statement can substitute for itemized expense details. Just make sure the statement covers the same time period you used for income.

Common mistake: Including non-cash expenses (like depreciation) in your expense totals. The IRS only considers actual cash outflows when calculating your ability to pay. Listing depreciation as an expense can inflate your apparent business costs, which may raise red flags.

Section 5: Calculate Minimum Offer Amount (OIC Version Only)

This section applies specifically to the Form 433-B (OIC). The IRS uses one of two formulas to calculate the minimum offer amount, depending on how quickly you plan to pay:

• 5-month payment plan: (Monthly net income × 48) + Total available assets
• 6–24 month payment plan: (Monthly net income × 60) + Total available assets

If the IRS calculates this instead of you, they'll rely on 1099 data and other information already in their system—which may not reflect your actual expenses or account for legitimate business liabilities. Completing this section yourself, with accurate financial records, can significantly lower your calculated minimum offer.

One important nuance: income-producing assets that are essential to business operations can sometimes be excluded from the asset calculation. Discuss this with a tax professional before deciding what to include.

Section 6: Other Information

This section captures additional details that affect the IRS's evaluation:

• Bankruptcy history (current or within the past 10 years)
• Affiliations with other businesses or related entities
• Outstanding debts owed to the business by others
• Pending or ongoing legal proceedings
• Active lines of credit

Don't leave fields blank here. If something doesn't apply, write "N/A" rather than leaving it empty. Blank fields can make your application look incomplete and lead to delays or rejection.

Section 7: Signatures

You sign under penalty of perjury, certifying that everything on the form is accurate and complete to the best of your knowledge. If a tax professional is representing you, they'll need to attach Form 2848 (Power of Attorney).

Required Supporting Documents

Submitting Form 433-B without the right documentation is one of the most common reasons applications get returned. Gather these before you send anything:

• Current profit and loss statement (covering 6–12 months)
• Six most recent bank statements for all business accounts
• Current loan and mortgage statements for all financed assets
• Accounts receivable and notes receivable statements
• Copies of recent federal tax returns

For OIC submissions, include these with Form 656 and the $205 application fee plus your initial payment.

5 Critical Mistakes That Sink Form 433-B Applications

1. Inaccurate asset valuations. Overestimating asset values leads to artificially high minimum offer amounts. Underestimating them triggers IRS scrutiny and can result in rejection. Get professional appraisals for significant assets.

2. Catching up on bookkeeping at the last minute. Many business owners scramble to reconstruct years of financial records when they receive an IRS notice. Messy or incomplete books lead to inaccurate figures—and inaccurate figures lead to bad outcomes. Accurate bookkeeping before a tax crisis puts you in a much stronger negotiating position.

3. Using the wrong averaging period. Picking a 3-month average during your business's peak season can overstate income and push your minimum offer amount higher than necessary. A 12-month average typically gives a fairer picture.

4. Leaving blank fields. The IRS will return an incomplete form unreviewed. Every field needs either a value or "N/A."

5. Including non-cash expenses. Depreciation and amortization don't count as expenses for Form 433-B purposes. Including them can distort your calculations in ways that complicate the review.

Form 433-B vs. Related Forms

Form	Who Uses It	Purpose
433-A	Individuals, sole proprietors	Collection information for individuals
433-B	Corporations, partnerships, LLCs	Collection information for businesses
433-B (OIC)	Same as above	Specifically for Offer in Compromise submissions
433-F	Individuals (streamlined)	Simplified version for smaller debts

What Happens After You Submit

The IRS will review your application and either accept the terms, request additional documentation, or propose a counter-offer. The process can take several months—the IRS targets 24 months to process OIC applications. During this time, collection actions are generally paused.

If additional documents are requested, respond quickly. Failure to provide information within the stated timeline can result in rejection and forfeiture of any fees paid.

If your OIC is accepted, make sure you comply fully with the agreed payment terms and file all required returns for the next five years. A default can unwind the entire agreement.

Work With a Professional

While you can complete Form 433-B yourself, working with an enrolled agent, CPA, or tax attorney significantly improves your chances of a favorable outcome. A knowledgeable professional can:

• Help you accurately value assets using the right methodology
• Identify which assets may qualify for exclusion
• Choose the right averaging period for income and expenses
• Negotiate directly with the IRS on your behalf

The IRS processes thousands of these applications. Presenting a clean, well-documented, professionally prepared submission stands out.

Keep Your Financial Records in Order

The foundation of a successful Form 433-B is accurate, up-to-date financial records. Businesses that maintain clean books year-round are far better positioned when tax issues arise—they can pull accurate numbers quickly, present credible documentation, and negotiate from a position of clarity rather than scrambling to reconstruct missing data.

Beancount.io offers plain-text accounting that keeps your financial data transparent, version-controlled, and fully auditable. When you need to demonstrate your business's financial position to the IRS—or anyone else—you'll have records you can trust. Get started for free and build the financial foundation your business needs.