How To Request The Right Installment Agreement or IRS Payment Plan

One of the ways you can get back into the compliance with the IRS is to request an Installment Agreement (IA). If you owe back taxes or you feel you cannot pay the amount you owe this April 15th, you can elect to pay over a series of payments (or over time). Realize, with an IA you end up paying more than the original balance because interest and penalties accrue.  You may request an IA with the IRS but knowing which one is the best fit for you is important because there are a few different types. If you setup a payment plan or IA, the IRS will typically refrain from serving you with a tax lien that becomes public in town and city records. Moreover, it is easier to obtain than an IRS Offer in Compromise.

The first type of Installment Agreement is called a Guaranteed Installment Agreement. The type of IA is “guaranteed” to you under the law if you have less than $10,000 in IRS back taxes or taxes you foresee you will owe.  You don’t need an IRS professional to do this. Here’s what to do:

1) File Your Taxes Using The Appropriate 1040 Form even if from past years

2) Next Use Form 9465 Installment Agreement Request or you can use the Online Payment Agreement (OPA). Make sure to approximate a reasonable payment method because you will need to pay back your tax balance under 10k over a period of 36 months.

3) Include Your User Fee ($52 for Debit Debt and $105 for Non-Direct Debt Payment Methods such as Credit Card, Money Order etc)

4) Mail back Form 9465, with your tax return, to the address on your tax bill.

5) You will receive a written notification of acceptance in 45 days or less.

Another type of Installment Agreement is called a Streamlined Installment Agreement because it does not require verification of your financials. It is served over 5 years or 60 months and designed for taxpayers with $25k or less. Calculate your minimum payment by taking the total you owe with penalties and divide it by 50 months because interest will accrue. Follow steps 1-5 above to request it.

Another Installment agreement for individuals with $25k or more in income tax liabilities is called a Verified Financial Installment Agreement.

1) Complete Form 433-F or 433-A which is called a Collection Information Statement. This is where you will document all of your financials. Contact a professional tax resolution firm to help with 433 forms (Optional but highly recommended)

2) Repeat steps 1-5 and include your completed 433 Form with your return and Form 9465

3) Wait 30-45 days for a response for acceptance or denial from the IRS