Settling Back Taxes Owed With an Installment Agreement

By Manuel Davis Jr.

Every year there are thousands of people that cannot pay in full the amount of taxes that they owe. If you are one of these people who cannot pay their entire tax bill owed, an installment agreement could be a good choice for you. This type of agreement can solve just about any issue having to do with back taxes ranging from not being able to pay to removing a tax levy. This type of agreement is easy and will put you on good terms with the IRS.

An installment agreement is the term used by the IRS for a payment plan. Setting one up will allow you to pay off the taxes that you owe over a specified period with a minimum monthly payment amount. The amount of your monthly payment must be large enough to pay off the entire balance of taxes owed in about a 2 year period. Sometimes a payment plan can be rejected for an unreasonable payment amounts, but the IRS will get back to you with a more acceptable amount. One thing to keep in mind is that while the amount of taxes is owed it is still accruing interest monthly and the IRS requires you to pay interest on the outstanding balance, so the faster it is paid off the less you will pay in interest.

To request an installment agreement you will have to download form 9465 from the IRS and fill it out appropriately to set up the correct payment amount. The individual IRS offices will approve installment agreements up to $10,000. If the amount is higher than $10,000 they will request additional financial information and will require some more paper work, sometimes people hire tax professionals to help with installment agreements above $10,000.

Once your installment agreement is accepted with the IRS you are on good terms with the IRS and they will honor your agreement. There are several things that you can do to make the agreement ineffective and the IRS can begin taking collection actions against you. You must not miss any payments, cannot fall behind on any other taxes due to the IRS, you must give updated financial information when requested to the IRS or the IRS finds out that you gave false information when requesting the agreement.

At times when agreements are request and the IRS feels that it may seem a bit unreasonable, they will try to pressure you to sell some of your assets or to borrow money from friends and relatives. Do not let this pressure get to you. Intimidation is one of the strongest weapons of the IRS, they would much rather collect tax amounts sooner rather than later and it is in their interest to try to make you pay sooner. They will accept your agreement, so don't give into any pressures you may encounter.

For more information on IRS Payment Plans you can visit the site here: IRS Payment Plans

BackTaxesHelp.com is a site dedicated to helping people settle back taxes by providing all relevant information as well as connections with tax specialists.

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