Preparing the IRS Financial Statement: Do’s and Don’ts

Preparing the IRS Financial Statement: Do’s and Don’ts

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If you can’t pay your tax debt in full, you will have to completely disclose your financial circumstances to the IRS.

There is no way to avoid this disclosure requirement other than making full payment.

A taxpayer’s financial information is provided on one or more of the following prescribed IRS forms:

IRS Form Number


Who Must File


Collection Information Statement for Wage Earners and Self Employed Taxpayers

Wage Earners and Self-Employed Taxpayers seeking Installment Payment Plans or Offers in Compromise


Collection Information Statement for Businesses

Corporations, Partnerships, LLC’s and other non-individual legal entities seeking Installment Payment Plans


Collection Information Statement (Short Form)

Individual Taxpayers (may be allowed in lieu of a 433A)

Here are 10 do’s and don’ts to keep in mind when the IRS requests one of the above financial statements:

  1. Do consult your accountant (preferably a CPA) before preparing the financial statement
  2. Do tell the truth
  3. Do use “quick sale value” in determining the values of your assets
  4. Do include all of your non-tax debts
  5. Do attach a statement of anticipated increases (if any) in your living or business expenses
  6. Do include all of your income from all sources
  7. Don’t hide assets
  8. Don’t assume the IRS will understand your financial situation (i.e. attach explanatory statements)
  9. Don’t sign over your assets to your spouse or other relatives (it won’t work and could trigger a tax evasion charge)
  10. Don’t sign the financial statement unless you are certain that it is accurate (potential penalties of perjury)


About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida


  1. jOE dIbELLO says:

    I am 63, on disability. I receive about 4k a month in DI and small pension. I have no assets, no home, car, bank or saving or stocks. I have lots of medical bills, alimoney and living expenses. My funds barley make it for the month. The IRS is asking for back taxes and taxes owed even after chapter 7 filing post 2003 which was discharged. I went through this with them 2 yrs ago but now they want it again and it is like they forgot we did this already once before.