A local IRS collection agent, known as a Revenue Officer, has contacted you, possibly with a surprise visit to your home or work.
The Revenue Officer has been assigned your IRS debt for collection, and is about to launch a full investigation into your finances.
Or, maybe you are getting up the nerve to give the IRS Automated Collection Service a call, prepared to discuss your debt and make payment arrangements.
Either way, at the core, the IRS wants to know how they can get paid. They will want the following information:
- Where you bank, and how much is in the account.
- Name of your employer, and how much you make.
- How much your house and cars are worth.
- Names and ages of your children.
- If you have a retirement account, and how much is in it.
- Your monthly living expenses, including rent, utilities, medical expenses, auto payments, and health and life insurance.
To gather this information, your IRS collection agent will request you to complete a six-page form: IRS Form 433A, Collection Information Statement for Wage Earners and Self-Employed.
But that’s not all.
In addition to telling the IRS all about your finances, they will want information from you that supports what you will list on the Form 433A. This includes providing the IRS your bank statements, paystubs, auto and mortgage loan statements, retirement verification, and proof of payment of housing and utility bills.
But what if you don’t want to spill the beans and give the IRS this information?
The IRS offers two programs to avoid completing Form 433A and to bypass financial disclosures. The first is based on owing under $50,000, and the second program is for balances between $50,001 and $100,000.
- If you owe the IRS under $50,000, tell them you would like a 72 month streamlined installment agreement.
You will still need to pay the IRS back, but the IRS will give you up to 72 months to spread your payments over, all without financial disclosures, Form 433A, and supporting documents. All you need to do is mail them your monthly payment.
It’s an automatic payment plan, taking you straight to account resolution, all while keeping the IRS out of your financial affairs.
Take that Form 433A off your desk and set it aside, it won’t be necessary.
- If you owe the IRS between $50,001 and $100,000, request an 84 month direct debit streamlined installment agreement.
To qualify for the 84 month direct debit streamlined installment agreement, the IRS requires that your payments be made by direct debit out of your bank account or payroll check. In other words, since you owe a little more, the IRS wants the payment to be automatic to avoid disclosures.
To create the direct debit with the IRS, we will need to complete IRS Form 433D, Installment Agreement. The 433D is used by the IRS to implement the direct debit with your bank.
On both non-disclosure programs, the IRS could request that your payments be shortened to fewer than the usual 72 or 84 months. The IRS has 10 years to collect from you, and a key part of avoiding financial disclosure and completing Form 433A is to repay the IRS in full. In that regard, if the IRS has, say, 60 months left on the 10 years, they will calculate your payment amount over 60 months to ensure they are paid in full. We can determine the amount of time the IRS has left to collect to make the correct payment calculation for you.
Also, you can actually owe more than $50,000 and $100,000 and still qualify for the financial non-disclosure programs.
The IRS does not include accruals of interest and penalties in the $50,000 and $100,000 amounts.
For example, let’s say you owe the IRS $115,000 and would like to repay it with an 84 month direct debit installment agreement for balances under $100,000. Of the $115,000, there is $20,000 in interest and penalties that has piled up over the years. You would qualify for the $100,000 and under program since the IRS does not factor the $20,000 of interest and penalty add-ons in their calculation.
Even though you owe $115,000, and will need to repay it, the IRS will subtract the $20,000 in interest and penalty, getting you under $100,000 and into the financial non-disclosure program. The same applies to $50,000 and under balances – you can owe more and still qualify.
The IRS has recognized that there are benefits to making it simpler for you to repay, even it means they learn less about you. It can be a winner for all sides: IRS gets repaid, and you get a case file closed quickly without investigation of your finances by IRS collection agents.
The IRS does not always have to know everything about you – it only takes an understanding of IRS guidelines to protect you and your property.