IRS Installment Agreements -- IRS Payment Plans -- What You Need to Know




If you cannot pay the IRS your back tax debt right away, but have the assets and/or income to pay the amount or part of the amount over time, an IRS installment agreement may be a good choice for you.
An IRS installment agreement (IA) is one of the most common method for individuals to arrange payment for back taxes owed with the IRS. If you are filing your taxes and know you cannot pay the entire amount of your tax debt, some taxpayers send in the installment agreement form with their tax return.
IRS Streamlined Payment Plans - IRS installment agreements are typically easy to obtain when the tax amount owed is under $25,000 because the IRS gives you a number and you agree to it and that is it. What could possibly be easier for the IRS. You call the IRS, the IRS tells you what the payment will be, you automatically agree to the payment plan and the IRS closes your file. Usually, a nervous and anxiety filled taxpayer will call the IRS and agree to just about anything. The IRS will not require your financials (pay stubs, bank statements, etc.) if you owe less than $25,000. Before you agree to anything with the IRS, you need to make sure that all of your allowable expenses (rent, mortgage, car payments, health insurance, etc.) are taken into consideration. Before you agree to an IRS Installment Agreement, you need to know if you are eligible and qualified for an IRS settlement through the Offer in Compromise program.


IRS Tax Relief Consultations

I am Dave Rosa, the V.P. of Client Relations at Flat Fee Tax Service, Inc. I will be conducting your free and confidential consultation. It is my duty to you, as well as Flat Fee Tax Service, Inc., to provide you with an honest and straightforward evaluation of your IRS problem. The reason Flat Fee Tax Service, Inc. has been complaint free is because we will not accept a case when we cannot benefit our client. There is more to an IRS Installment Agreement than agreeing to "a number." 
Before you agree to an IRS Installment Agreement (IA), there are many factors to be considered:
  1. Where in relation to the Statute of Limitations is your tax liability?
  2. Can your tax debt be reduced by amending your tax returns?
  3. Can the Penalties and Interest that the IRS has added to your back tax debt be eliminated due to "reasonable cause?"
  4. Are you qualified and eligible for an IRS settlement through the Offer in Compromise program?
  5. Is your financial condition such that you should be declared Currently not Collectible?
  6. How much money do you have left after your allowable expenses are factored in?
An Installment Agreement (IA) will get a your IRS levy released but you may also qualify:
  • for an IRS settlement of your back tax debt through the Offer In Compromise program, an elimination of the penalties and interest through a Penalty Abatement, you may be declared Currently not Collectible, bankruptcy and so on.

A Federal tax lien has generally been more prevalent before this year when the IRS decided generally to withdraw or not file a Federal tax lien if a taxpayer sets up a Direct Debit Installment Agreement or Installment Agreement that requires monthly payments be deducted directly from their bank account.
As mentioned previously, should you owe the iRS more than $25,000 you will be required to complete a an IRS Form 433-F as well as provide 3 months of pay stubs, 3 months of bank statements and other financial material.

Types of IRS Installment Agreements

There are different types of Installment Agreements, which allow you to pay IRS taxes over a series of monthly payments if you cannot pay in full. Below you find the most common types of IAs, and a link to each which will provide you the details as to how to file, their specific requirements, and their details.

Guaranteed Installment Agreement - This is the simplest type of Installment Agreement and is for taxpayers who owe $10k or less in taxes.

Streamlined Installment Agreement is intended for taxpayers that have tax debt of $25k or less. It is deemed "Streamlined" because it will not require full financial disclosure.

Financially Verified Installment Agreement - If you owe over $25k or you can't make the minimum monthly payment on a Streamlined Installment Agreement you want to look at getting this type of installment agreement. It has many names, but basically will require you to fill out Form 433 to fully verify your financial situation. A tax professional is best to work with here.

Installment Agreement Over $100K - If you owe over $100K, your debt will be assigned to the "Big Dollar" division of the IRS and you will have a Revenue Officer assigned to your case. Your case will be more complicated and you will need a longer term installment agreement.

Sometimes in this case, the IRS will require you to sell off assets to satisfy some of your debt before offering you this type of IRS Installment Agreement (I)A. It is highly recommended that you use an experienced IRS professional for this negotiation.

Partial Payment Installment Agreement - If you are truly unable to pay off your taxes, you may be declared Currently not Collectible or you can look to apply for a Part-Pay Installment Agreement (IA) which will require you to pay less than you owe in full over time (as part of your debt falls of each period due to the Statute of Limitations. This is rarely accepted and requires full financial disclosure so a tax professional is best to work with here.

Before you think of applying for a Partial Payment Installment Agreement, you need to consider an Offer in Compromise which, most likely, would be the easier "way to go."
With all types of Installment Agreements, you can utilize IRS Form 9465, the "Installment Agreement Request," as part of the process of requesting an IRS Installment Agreement. If you owe less than $25,000 including penalties and interest you can use the Online Payment Agreement application located on the IRS's website, otherwise an IRS Installment Agreement (IA) over $25,000 would require more paperwork including a collections information statement.

Fees and Process for Common IRS Installment Agreements

When setting up an "everyday" (common) IRS installment agreement like a Guaranteed or Streamlined installment agreement you will also have to pay a one time fee that is paid with the first monthly payment. The fees are the following:

- $52 for a new installment agreement that is direct debt (deducted directly from your bank account). This, in most cases, will prevent a Federal tax lien from being filed or after a few payments lead to the withdrawal of one. The drawback is this: The IRS has your banking information and can potentially levy your bank account if you default on the Installment Agreement.

- $105 for a new installment agreement that is not direct debit. (payroll deduction, credit card, online payment option, money order or check).

- $45 for restructuring or reinstating an existing installment agreement.

The IRS will accept or reject your installment agreement request usually within a 30 day period. The IRS must accept your request if you meet some basic requirements (if you filed a guaranteed Installment Agreement (IA) and you meet requirements). Read the IRS requirements for each by visiting the specific Installment Agreement (IA) you are interested in or is most appropriate for you.

The IRS can back out of the Installment Agreement
If you do miss a payment due to a change in financial condition it is important to contact the IRS immediately, preferably by your experienced IRS tax representative. Once payments are missed the IRS can (most likely) place a Federal tax lien on your assets (if they didn't file a tax lien when you agreed to an Installment Agreement in the 1st place) or the IRS could place a tax levy on your paycheck (wage garnishment), bank account, or social security.

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  1. Before you agree to an IRS Installment Agreement with the IRS, you need to find out if your back tax debt can be reduced by a penalty abatement, settled through an Offer in Compromise or whether or not you may be declared Currently not Collectible.


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