Installment Agreement

Can’t Pay Your Taxes? Want To Know, “Can I Get A Payment Plan For My Tax Debt?” 

If you owe more in taxes than you can pay, or if you owe a back tax bill that is more than you can afford, then it is possible to make payment arrangements with the IRS to pay your debt in installments. This is an IRS installment agreement. Most state tax authorities or departments of revenue offer similar options to make payment arrangements. For an IRS installment agreement, if you can afford to make the minimum payment plan, the request submission is often on Form 9465, Installment Agreement Request.

However, these payment plans come with several rules, making it necessary to understand what you are agreeing to. In addition to charging interest and fees on the amount owed, there are severe consequences for missing a payment.

How can I get an installment agreement for my tax debt?

When you cannot pay the amount you owe to the IRS, there are ways to make payments as part of an installment plan. These plans face several restrictions, however. To qualify, you must meet these conditions:

  • You must be current on this year’s taxes. This includes filing for all prior years in which you had a filing requirement, your quarterly estimated tax payments, and any payroll taxes you must pay for your employees.
  • You must owe less than $50,000.
  • You must be able to pay the total amount in six years (72 months) or less.

If you can’t meet these conditions, it is still possible to pay in installments. But, the case must be analyzed individually. Often, these cases are good candidates for negotiation. Talk to an Enrolled Agent, such as the EAs at Peace Of Mind Tax Help, who has experience dealing with the IRS if you find yourself in this situation. A good tax Enrolled Agent can help you through the negotiation process. And may even be able to lower the total amount of what you would pay.

Installment agreement terms are based on the total amount owed. However, suppose you can prove to the IRS that you can’t pay the entire debt in six years. In that case, it’s possible to negotiate a settlement. You can ask for a suspension of collection activities (known as currently non-collectible status) or file for bankruptcy.

This is based on details you provide to the IRS regarding your income and assets. Before starting on any of these options, however, it’s a good idea to consult a tax resolution specialist, such as Peace Of Mind Tax Help, who can help guide you through the process to ensure you protect your interests.

Who decides how much I have to pay?

The IRS typically decides how much you have to pay each month based on the information you provide them in an installment agreement request. If you cannot pay the statutory minimum payment based on your debt, the amount can be based on your discretionary income; the amount you have left over after paying your monthly bills. It’s important to note that the IRS labels many expenses as discretionary. Money used to pay private school tuition, cable TV, or dine-in restaurants is a discretionary expense.

If the IRS decides you have to pay more than you can afford, it is possible to appeal the decision. Because these appeals can be time-consuming, many people hire an Enrolled Agent (EA) before applying for an installment agreement to ensure that the result is something they can reasonably pay.

IRS Payment Plan Fees and Interest

Installment plans with the IRS almost always come with fees, penalties, and interest. When you negotiate your installment plan, the number of penalties and the interest you owe will be subject to determination in accordance with the current laws.

It’s important to realize that while it’s doubtful that you will avoid paying any fees or interest. It may be possible to negotiate a lower rate or reduced penalty. You might want to consult with your Enrolled Agent representative to see if you can qualify for a reduced rate.

What happens if I can’t pay my installment agreement?

An Enrolled Agent can help you to decide the right course of action. If you cannot make payments on an installment agreement, it’s possible to offer a compromise settlement, ask that collection activities be suspended, or file for bankruptcy. In all of these cases, it’s essential to understand the consequences of these decisions.

If you cannot make payments after your installment agreement has started, it’s possible that the installment agreement can be revoked. Fortunately, the IRS typically waits between thirty and sixty days before deciding to rescind an installment agreement. So you will have some time before you have to make your payment.

If you cannot make the payment, you can ask for a change in your payment plan. Typically, these are granted in cases with a significant change in income or financial circumstances.

Peace Of Mind Tax Help Representation

One of your most important rights as a taxpayer is your right to have a qualified tax resolution professional, such as an Enrolled Agent (EA), represent you in front of the IRS and/or States and provide tax resolution for your tax lien.

When you hire Peace Of Mind Tax Help to assist you, we will guide you through the process of requesting an installment agreement while advocating on your behalf and protecting your interests.

Peace Of Mind Tax Help is here to help you because when you’re requesting an IRS or state payment plan, the worst thing you can do is to do nothing and not make payment arrangements for your IRS debt. The best decision is to take the necessary first step and address your tax liability now!

Click on the “Get Peace Of Mind” button at the top of the page to take that first step.