It depends. If a taxpayer has an assessed balance due below $50,000, the taxpayer does not have to disclose their financial information unless they do not have the ability to full pay the amount due over 72 months or over the collection expiration statute date, whichever is shorter. If the taxpayer has an inability to pay their back taxes, the taxpayer’s financial information is required to place their account in a partial pay installment agreement (PPIA), currently non-collectible (CNC) status, or an offer in compromise (OIC).
If the assessed balance due is above $50,000, but you can afford to make a lump sum payment to pay down the liability to under $50,000, the taxpayer does not need to provide financials. However, the taxpayer must request additional time to bring the balance due below $50,000.
If the taxpayer cannot afford to make a lump sum payment, and the assessed balance due is above $50,000, the taxpayer’s financial information is required.
If a taxpayer’s case is with ACS, Automated Collection Service of the IRS, a Form 433F Collection Information Statement https://www.irs.gov/pub/irs-pdf/f433f.pdf will be required. If the case is assigned to IRS Appeals or a Revenue Officer, a Form 433A Collection Information Statement https://www.irs.gov/pub/irs-pdf/f433a.pdf will be required. Regardless of the form used, the IRS wants to analyze a taxpayer’s assets and equity, income and expenses in order to determine whether the taxpayer has assets and or income available to full pay, or if the taxpayer cannot full pay, what do their financials show the taxpayer can pay per month towards their back taxes. Although, this seems simple, it can be complex, because what a taxpayer believes they can afford to pay, is usually not what the IRS determines a taxpayer has the ability to pay.
