Very few of you will be aware of the fact that the IRS can allow you to pay through monthly installment payments. For the purpose, you need to enter into a partial payment installment agreement with the IRS. You can partially pay your taxes and it won’t pose a burden on you. However, this type of agreement with the IRS is not very simple and requires full disclosure of the financial condition of an individual seeking an installment agreement with the IRS. One needs to disclose his all incomes, assets and also liabilities. Form 433 (A, B or F) is required to disclose all liabilities. In general, this IRS settlement is rather effortless to obtain than an Offer In Compromise (OIC).
What are the requirements to obtain an installment payment agreement ?
- Previous years’ IRS taxes. These must have been filed and paid
- A combined sum total of over $10K in IRS tax debt, penalties and interest.
- Form 433-A, Form 433-B or Form 433-F as the case be, for the Collection Information Statement.
- For Installment Agreement Request Form 9465
- Not under bankruptcy or have not accepted an Offer in Compromise
- Cancelled check, credit card, bank information
- You do not have assets. If you own assets, then you need to have some specific equity arrangements in order to qualify for the agreement.
How to request for an installment agreement IRS?
- First of all, you need to complete the IRS Form 433-A, if you are an individual. If you are a business, then the IRS Form 433-B is for you. Fill in the information carefully, the Collection Information Statement. You need to fill in your SSN/ TIN, your spouse’s SSN, your address telephone numbers. You may also need to include supporting documents for income and expenses.
- Form 433-A, Form 433-B or Form 433-F as per the requirement.
- Next, print or call 1-800-829-1040 to mail you the Form 9465. The form includes detailed directions to complete it. It requires a user fee as well of $52 if direct debt or $120 if it’s not a direct debt. With your user fee, you need to include your first month’s payment as well. If unable to pay for a particular month, a reinstatement fee of $45 will be involved.
- Now, you need to calculate the monthly installment you will be able to pay. This is not an easy task, however. For this you need to know the amount you owe, including interest and penalties. If the calculation seems to be difficult you may take the help of a tax professional.
- Next, you need to send your Form 9465, your tax return (1040), and your completed 433-A form. You also need to send the user fee and the first payment.
- If the IRS accepts your installment agreement, they let you know about it within 30 days of the application. If you don’t get any intimation from them in one month, you may call them, seeking the status of your application.