IRS Tax Relief - IRS Payment Plans


Anyone Can Call up the IRS and End Up in a Very Bad Payment Plan

When selecting the most appropriate IRS payment plan, it is important to understand where you stand regarding your back tax debt. Do you think you will have with the money in a few months, or do you think you will need more time? Another important factor is estimating or finding out your total tax liability.



If You Can Make a Payment on your Tax Debt in 120 Days or Less

If you can make a payment in less than 120 days or less,  you can request a short-term payment extension with the IRS using the Online Payment Agreement Application.  Requesting a longer term than what is needed will cost you more as a short-term extension carries no application or user fee unlike an Installment Agreement. If the IRS gives you an online approval for this payment extension, you typically will get a hard-copy confirmation in the mail within 10 days.  Realize that the IRS will usually add on a “Failure to Pay Penalty” so, therefore, if you can pay the IRS in full on April 15th (or other filing date), you can avoid this penalty.

If You Cannot Make a Payment on your Tax Debt  in 120 Days or Less

If you cannot make a payment on your back tax debt in 120 days or less, you may want to consider an IRS Installment Agreement which will allow you to pay your tax liability over a series of monthly payments. An Installment Agreement will carry interest and you will incur the Failure to Pay Penalty. However, the latter penalty will be reduced by 50% with an IRS acceptance.  Now there are a few different types of IRS Installment Agreements (IAs), each dependent upon your total tax liability, but these have a user fee ($105 or $52 if directly debited from your bank account).




IRS Tax Relief

Guaranteed Installment Agreement – Should you owe the IRS over $10,000 this Installment Agreement (IA) will be the most appropriate for you. To request this agreement, either use the IRS Online Payment Agreement Application or file form 9465. You need to make sure you filed all tax returns due. This payment plan is unique because under the tax code you are “guaranteed” an acceptance by the IRS.  When requesting this Installment Agreement (IA) you will need to state a monthly payment amount that is equal to or greater than the minimum monthly payment. To calculate this, take the total amount you owe (including penalties and interest) and divide that number by 30. Your minimum payment should pay off your total debt amount in 36 months taking into account penalties and interest.

Streamlined Installment Agreement – Should you owe the IRS more than $10,000 but less than $25,000 (taking into account penalties and interest) you can apply for a “Streamlined” Installment Agreement by utilizing the Online Payment Agreement Application or by completing form 9465. The reason this is typically called “Streamlined,” is due to the fact that the IRS will not require financial disclosure or verification of your income, expenses, and assets. In other words, you are doing the work for the IRS. To figure out your monthly minimum payment take the total amount you owe (again plus interest and penalties) and divide this number by 50.

Financially Verified Installment Agreement – Should you owe tax for over $25,000 or more, you will have to request this type of payment plan. This type of Installment Agreement is more complicated because you need to provide a financial statement to the IRS (Form 433-A) which is called a Collection Information Statement. You need to disclose again your assets, income, bank records and liabilities; your monthly payment will determined by what you have the ability to pay each month determined by Form 433-A. With this Installment Agreement IA it is best to work with a tax professional simply because Form 433-A can be complex.

Partial Payment Installment Agreement – This Installment Agreement is available if you cannot qualify for any other Installment Agreement (IA), and you owe more than $10,000 (including penalties and interest) in tax. It allows you to pay a monthly payment amount up until the Statute of Collection (SOC) expires on each period of your debt; this time frame is generally 10 years minus the period from the assessment date.  As the Statute of Limitation expires on each period, that debt will fall off, and you will continue to make monthly payments on the remaining balance. It will also allow you to pay what you can afford or what you have the ability to pay, which is determined by Form 433. The IRS will require you to sell or liquidate assets before you can qualify for this payment plan. It is highly recommended that you work with a tax professional as negotiations will occur and you need to understand complex terminology and calculations.


Before you enter into an IRS payment plan, you need to know if your tax debt can be reduced further. 
  1. Can your tax returns be amended?
  2. Did you have "reasonable cause" that put you in this situation? Did you medical issues? Did you have a substance abuse issue? Were you divorced? Did you care for a family member? Did you lose a job and have a loss of income? There are many "reasonable cause" actions that could eliminate and/or reduce the penalties and interest added to your tax debt.
  3. Are you qualified and eligible to settle with the IRS through the Offer in Compromise program?
  4. Is your financial situation such that you need to be given Currently not Collectible status?
If you have a job where your income is hourly / fixed or you are relying on Social Security or Social Security Disability (SSDI), you may be a great candidate to settle with the IRS.


If you make $100,000 or less, you are eligible to settle your IRS tax debt through the Offer in Compromise program.


“I’ve made a whole set of changes to the Offer in Compromise (OIC) program since I’ve been here to try to increase the participation rate, increase the acceptance rate, because it’s good for the tax system,” Doug Shulman, the IRS Commissioner said.

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If you qualify for an IRS Settlement through the IRS Offer in Compromise (OIC) program, you can "get your life back", you can save thousands of dollars in taxes, penalties and interest. Taxpayers can have IRS Tax Debt on all types of taxes, including most payroll taxes, penalties, and interest. It is the closest thing to amnesty that the federal government offers in connection with back tax debt.

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  1. Before you agree to an Installment Agreement or Payment Plan with the IRS, find out what your options are. Don't agree to pay more than you should or that you have to.


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