IRS Installment Agreement
The installment agreement is the
most common form of payment plan.
The IRS accepts more requests for
this type of payment than any other.
When you qualify for an installment
agreement you will be allowed to
pay off the tax amount owed through
monthly payments. The amount you
pay monthly must be enough to pay
off the entire balance of the taxes
owed plus interest in a period of
3 years or less. You must be able
to consistently make these payments
or else the agreement will be cancelled
and you will be charged with a new
setup fee to re-enter into the agreement.
So you can't pay taxes owed to the
IRS? Don't worry the IRS deals with
thousands of individuals like yourself
every year and they are very
understanding of your financial
situation. The IRS has created a few
payment methods for individuals that
cannot pay their taxes owed at the time
they are due.
To apply for an installment agreement
you must complete IRS form 9465
which is available on the IRS website
or you can call the IRS and have
them mail you the required form.
Also, you can use the Online Payment
Agreement (OPA) to apply for installment
agreement. If you owe greater than
$25,000 you will be required to
fill out a Collection Information
Statement, Form 433F. If you cannot
make the minimum payment required
you may be able to qualify for the
partial payment agreement.
If you
owe less than $25,000 in taxes,
the
IRS will allow you to setup
a payment plan without any questions.
If you owe more than $25,000 they
will just require you to file a
bit more paper work to ensure your
ability to make payments over time.
One thing to keep in mind before
setting up a payment plan is that
you will save the most money by
paying in full because you will
not be charged additional interest
on the tax amount owed. For those
that cannot pay immediately, payment
plans are available to allow the
individual to pay the tax amount
off in smaller, more manageable
monthly payments. Below are the
two most common forms of payment
plans.
Partial Payment Installment
Agreement The IRS realizes
that sometimes individuals cannot
make the minimum required payments
with an Installment agreement and
therefore they created the partial
payment option. The IRS is not as
cruel as everyone believes them
to be, they do not want individuals
to make payments greater than their
financial situation will allow.
Out of all IRS filings, an installment
agreement request is one of the
easier filings to do. The difficult
part of this filing is figuring
out how much you want to make as
a minimum monthly payment amount.
You have to realize that the lower
amount you choose the more you will
pay in total interest, but you also
don't want to pay more than you
can financially handle because if
you miss one payment the IRS will
cancel the agreement and they can
take harsh collection actions against
you. Many times it is a good idea
to consult a tax professional when
setting up these agreements. Tax
professionals will be able to analyze
your financial situation and find
the best payment method for you
and complete the paper work to IRS
specifications.
The IRS has a very automated way
of collecting as much as they can
in taxes and to throw off that automation
you must prove your poor financial
situation to them and they will
make exceptions. In order to apply
for the partial payment option you
will need to fill out IRS form 9465,
IRS Form 433-A, and write a letter
saying that you are requesting the
partial payment installment agreement
option.
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