Offers of Compromise

Booklet 656: Form 433A

Booklet 656 form 433b is needed for those business owners that have businesses that are any other entity than sole proprietorships. This form is used to calculate the minimum offer you can make the IRS when attempting an offer in compromise, unless you are able to provide evidence that would encourage the IRS to think otherwise.

How to compete the form

Section 1 is where you’ll provide an employer identification number, partners, officers, LLC members, major shareholders, and frequency of tax deposits.

Section 2: Next, the form asks for business asset details. This includes the company’s bank accounts, investment accounts, and notes receivable. Then it requests data on the business’s real estate, vehicles, and equipment. However, in reporting their value, the internal revenue service permits you to exclude your equity in any income producing assets.

Section 3: In section 3 you are to provide information regarding your business income, such as average gross monthly income (supported by corroborating documentation).

Section 4: This portion similarly requests your business expenses. This section seeks average gross monthly business expenses found in records from the recent six — twelve months. Yet, again, if you do provide a profit and loss report for this period, you can then relay an average expense amount derived through these data instead.

When calculating an offer

If you claim you’ll be able to pay off the offer amount within a period of 5 months, follow the procedure below to calculate.

[ 48 x Business income in excess of expenses] Total available assets

The formula below is for calculating the offer when you do not plan to satisfy payment within a period of 5 months.

[Business income in excess of expenses x 60] Total assets available

Regardless of

Section 6

Finally, Form 433-B requires certain miscellaneous information that it will consider in settling your tax debt. As an example, this section asks whether your company has ever filed for bankruptcy. This question is relevant because your business is ineligible to apply for an offer of compromise on its tax liability when in a bankruptcy proceeding. This sectionalso asks if this enterprise has other affiliations, asks if any related entities are indebted to your business, and asks if the business has been party to any litigation. Additionally, it asks whether the business has unloaded any assets in the last 10 years at a discounted rate.

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