IRS Installment Agreement - Pay Your IRS Back Taxes in Monthly Payments!

IRS Installment Agreement for IRS Back Taxes

IRS Installment Agreement - Writing a CheckAn IRS Installment Agreement is a popular type of IRS payment plan, allowing you to pay off your entire tax debt with monthly payments. How much you pay and over what period of time depend on the type of IRS Installment Agreement you get: a Full Financial Disclosure Agreement or a Non-Disclosure Agreement.

IRS Installment Agreement: Non-Disclosure

Just as its name implies, you do not divulge any of your financial information to the IRS under this IRS Installment Agreement. This means that the details of your income, assets, and monthly expenses are kept private.

The Non-Disclosure IRS Installment Agreement is only available to those with an IRS tax debt below $25,000, and you must agree to pay your back tax debt (including accrued penalties and interest) in full within 5 years, assuming there is at least 5 years left on your statute of limitations.

IRS Installment Agreement: Full Disclosure

This IRS Installment Agreement may be the only monthly payment plan available to those with IRS tax debt above $25,000. Under this IRS payment plan, you must submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, which details your income, assets, and expenses for basic necessities. The IRS uses this information to:

  • Calculate your monthly disposable income, and therefore determine your monthly payment
  • Determine how long your Full Disclosure IRS Installment Agreement will last. For example, if the IRS calculates that you can afford pay off your tax debt within 1 year, your agreement will be for 1 year. If you have enough to pay it off within 2 years, your agreement will be for 2 years, and so on, up to the expiration of your collections statute.

Another important point about this particular agreement is that if your income increases, so will your monthly payment. The IRS reasons that a raise in income is a raise in disposable income. Therefore, they may increase your monthly payment to collect on your tax debt faster.

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IRS Installment Agreement: The Application

You can apply for an IRS Installment Agreement using Form 9465, Installment Agreement Request. The IRS will usually notify you within 30 days of receiving your request if you are approved for the program. You may also fill out their Online Payment Agreement Application, which may give you an immediate notification if you are approved.

Once approved for an IRS Installment Agreement, you'll be responsible for the one-time user fee if you agree to make your monthly payments via EFTPS (electronic funds withdrawal). If your income is below a certain level, you may qualify for an even more reduced fee. If the IRS feels you don't qualify for this reduction, you can request the reduced fee with Form 13844, Application for Reduced User Fee for Installment Agreements.

IRS Installment Agreement: Payments

Payments on your IRS Installment Agreement may be made via:

  • Check or money order made out to "United States Treasury"
  • Credit card

It's important to note that while you're in an IRS Installment Agreement, you must be up-to-date with your tax filings. Failing to do so is a violation of the contract's terms, causing you to default (discussed later). Also, any tax refund due to you while you're in the Installment Agreement will be withheld and applied to your tax debt (and you'll still be responsible for your regular monthly payment on top of that).

IRS Installment Agreement: Penalties & Interest

You may be in a payment agreement with the IRS, but it's not the same as having your entire debt paid in full, which is what the IRS wants most. So even though you've been approved for an IRS Installment Agreement, penalties and interest continue to accrue until your last payment.

IRS Installment Agreement: Defaulting

If you fail to make your monthly payments on time, you'll default on your agreement with the IRS. They'll then have full rights to issue IRS tax liens, IRS bank levies, and IRS wage garnishments, to collect the full amount of your tax debt right then and there. For this reason, you may want to opt for EFTPS for your monthly payments.

An IRS Installment Agreement can save you from a big financial hit by spreading out your back tax payments. If you need help setting up an IRS Installment Agreement, call or fill out the form below. You'll be connected to a tax debt resolution company with Licensed Tax Professionals that will defend you from the IRS. Call now for help with your IRS Installment Agreement!

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