Form 433-F: The Shorter Financial Statement, Explained

If your case is with the Automated Collection System, the phone-based collection unit, or with a campus collection function, you will probably be asked for Form 433-F instead of Form 433-A. It is four pages, two of which are instructions. People see that and relax. Do not.

The current version is Form 433-F (Rev. 7-2024). Its own instructions say its purpose is "to obtain current financial information necessary for determining how a wage earner or self-employed individual can satisfy an outstanding tax liability."

Where Form 433-F is used

The Financial Analysis Handbook, IRM 5.15.1.2, describes Form 433-F as the Collection Information Statement "Used by the Automated Collection System (ACS) and the campuses for individuals." Revenue officers in the field can use it too, in two situations:

• For Trust Fund Recovery Penalty investigations when the individual is a wage earner and the potential penalty is less than $100,000.
• For self-employed and individual wage earners who owe individual liabilities only, with an aggregate balance of assessments less than $250,000.

There is an important exception. Form 433-F cannot be used for offer in compromise cases. If an offer is on the table, you are back to Form 433-A (OIC).

The campus procedures in IRM 5.19.13.3 tell certain units to request Form 433-F when a taxpayer cannot full pay within 180 days or qualify for a guaranteed or streamlined installment agreement. Other ACS employees take the same information over the phone and enter it directly. Either way, the categories are the same.

The header

Names, address, county of residence, Social Security numbers, phone numbers, and a box for the number of people in the household who can be claimed on this year's tax return, split into under 65 and 65 and over. That split is not trivia. The out-of-pocket health care standard is higher for people 65 and older, so the age count changes your allowable expenses.

If you or your spouse are self-employed, the header also asks for the business name, EIN, type of business, and number of employees.

Section A: Accounts and lines of credit

Personal bank accounts, including online and mobile accounts like PayPal, and investments, which the form defines broadly: certificates of deposit, trusts, IRAs, Keogh plans, SEPs, 401(k) plans, profit sharing plans, mutual funds, stocks, bonds, and commodities. The instructions say to list all accounts, even if they currently have no balance. Section A also includes a digital assets table for cryptocurrency.

Section B: Real estate

Home, vacation property, timeshares, vacant land and other real estate, with current value, balance owed, equity, monthly payment, purchase year and price, and any refinance. Your mortgage payment goes here, not in the housing expense section. The instructions say so in plain words: "Do not enter mortgage payment here. Mortgage payment is listed in Section B."

Section C: Other assets

Cars, boats, recreational vehicles, whole life insurance policies, and anything else of value: paintings, coin collections, antiques, business tools and equipment, and intangibles like domain names and patents.

Section D: Credit cards

Type, credit limit, balance owed, and minimum monthly payment. The instructions say to list all credit cards and lines of credit, even with no balance. Available credit is a potential source of payment in the IRS analysis, so expect questions.

Section E: Business information

E1 lists accounts receivable owed to you or your business, including government grants and contracts. E2 asks whether you accept credit card payments or digital asset payments, with the merchant account information. If you sell online, this section applies.

Section F: Employment

Employer, pay frequency, gross per pay period, and taxes per pay period for you and your spouse. The form says that if you attach a current pay stub, you do not need to complete this section. Attach the stub. It is cleaner.

Section G: Non-wage household income

Alimony, child support, net self-employment income, net rental income, unemployment, pension, interest and dividends, Social Security, and other income. Self-employment and rental income are reported net of expenses, with a current year profit and loss statement attached. Depreciation does not count as an expense, because "only cash expenses are used to determine ability to pay." A loss is entered as zero.

Section H: Monthly necessary living expenses

This is where hardship is won or lost. Each category has two columns: "Actual Monthly Expenses" and "IRS Allowed." You fill in the first. The IRS fills in the second.

1. Food and personal care. Food, housekeeping supplies, clothing, personal care, and miscellaneous. The instructions say that if you do not spend more than the standard for your family size, fill in the total only. The miscellaneous amount cannot exceed the standard.
2. Transportation. Gas, insurance, licenses, parking, maintenance and public transportation. Car payments are listed in Section C.
3. Housing and utilities. Rent, electric, oil and gas, water and trash, phone, cell, cable and internet, real estate taxes and insurance if not already included in Section B, and maintenance.
4. Medical. Health insurance and out-of-pocket health care costs. Cosmetic procedures are generally not allowed.
5. Other. Child and dependent care, estimated tax payments, term life insurance, employer-required and voluntary retirement, union dues, delinquent state and local taxes, student loans, court-ordered payments, and other items you specify.

The instructions list conversion factors for bills not paid monthly: divide quarterly amounts by 3, multiply weekly by 4.3, biweekly by 2.17, and semimonthly by 2.

Listing a voluntary retirement contribution does not mean the IRS will allow it. IRM 5.15.1.28 says contributions to voluntary retirement plans are not a necessary expense.

Verification is coming

The form warns that the IRS may ask for supporting documentation of income or "substantiation of your stated expenditures." The campus authority level tables in IRM 5.19.13.2 require internal verification of assets, income and expenses for partial pay agreements and CNC, with paper substantiation when claimed amounts look unreasonable, or exceed the standards and allowing them would produce a CNC hardship result.

What happens after ACS gets your numbers

ACS employees enter the financial information on their system and compare your actual expenses with the allowed amounts. If allowed expenses meet or exceed income and you have no meaningful equity, the account can be closed as CNC hardship. IRM 5.19.17.2.4 says that once it is determined that the taxpayer has a hardship, "the balance due accounts must be closed CNC." It also says all levies on salary or wages must be released when a case is closed under hardship provisions.

If you have some ability to pay but not enough to clear the balance before the collection statute runs, the conversation shifts to a partial pay installment agreement. And if you meet the hardship criteria but would rather make a small voluntary payment, IRM 5.19.17.2.4 allows the IRS to set up the agreement with a backup Form 53, the CNC report, already prepared in case the agreement fails.

Once a CNC closure is approved, the campus procedures require the IRS to send Letter 4624-C, Case Closed, Currently Not Collectible, which includes lien filing language when a lien determination applies. That letter is your confirmation. File it somewhere safe.

Common Form 433-F errors

• Putting the mortgage payment in Section H housing instead of Section B.
• Reporting net pay without attaching a pay stub that shows gross pay and withholding.
• Claiming a large "miscellaneous" figure. The instructions cap miscellaneous at the standard for your family size.
• Forgetting a spouse's income in Section G because only one spouse owes.

Also check whether you even need a full statement. Some small-balance hardship cases qualify for CNC exception processing with no financial statement at all. And if you are deciding between this form and the long one, read Form 433-A vs. Form 433-F.

Four pages. Signed under penalty of perjury. Treat it with the same care you would give a loan application, because in a sense, that is exactly what it is.