Ability to Pay – Business
IRS Definition
Form 433B, Collection Information Statement for Businesses helps the IRS calculate a business’ ability to pay its tax debt. If in-business taxpayers can fully pay liabilities from current assets and/or income they do not qualify for installment agreements. Full payment will be requested.
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If your business does not qualify for a streamlined or in-business trust fund express installment agreement, the IRS will require that you complete a Form 433-B, Collection Information Statement for Businesses. The form requires that you list all of the business’ assets, income and expenses. The IRS will first look at the business’ ability to pay the tax debt in full by selling any assets that are not necessary for the production of income. Then they will look at the monthly net profit to determine the monthly payment the business will be able to make and stay current with operating expenses and tax payments including payroll taxes, if applicable.
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