Taxation & Estate Planning

All about IRS Installment Agreements

By Darrin Mish

Obtaining an IRS installment agreement may be a solution to your IRS Problems.  If you are unable to pay your taxes in full and want to avoid more IRS Problems, an installment agreement may be your best solution.

An installment agreement allows you to make monthly payments and generally gives you up to 60 months to pay your taxes.

Installment Plan Criteria

?    You owe less than $10,000
?    You have filed and paid your taxes in the past 5 years by the due date and have not entered into an installment agreement to pay these taxes
?    You provide documentation to prove you cannot pay your taxes in full on time
?    You agree to pay the full amount owed in 3 years and agree to comply with the tax laws during the plan

What Do I Need to Do Next?

Form 9465(Installment Agreement Request) should be filed along with your tax return.  The IRS may also ask you to fill out Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) to help determine if you are financially unable to pay your taxes.  This form will ask for your income, expenses, assets, and liabilities.

Approval of Installment Agreement

After the IRS approves your installment agreement, you will receive a letter from the IRS informing you of how to pay the fee for the agreement and when to make your first payment.  To comply with the agreement you will need to file your future tax returns on time and pay the taxes due by the due date.  If you are due a refund, it will be used to reduce your tax debt.

You will receive a letter after the IRS receives each monthly payment stating the amount you still owe.  It will also show the amount and due date of your next payment.  If you have the amount drawn directly from your account, you will not receive this notification.  It is also possible to make your payments with a credit card.

If You Default on an Installment Agreement

If you fail to make payments or fail to pay the amount due on future tax returns, you will be default on your agreement.  At that time, the IRS may take enforcement actions.  This could be in the form of a Federal tax lien or IRS levy.

To avoid further IRS Problems, contact our office for assistance with the installment agreement process.  Our knowledgeable staff can help you with any IRS Problems you may be having.  Contact us today.

Full post as published by IRS Problem Solver Blog on June 24, 2008 (boomark / email).