DIY Tax Defense: The Installment Agreement

 

installment agreement

If you’re facing the end of tax season with a large tax bill that is beyond your means, the IRS installment agreement is one possible option available to you. In addition to the Offer In Compromise or the CAP program, the Installment Agreement is available to taxpayers who can’t pay their tax bill in full.

Eligibility

You must owe less than a total of $50,000 in taxes, penalties and fees. Businesses must owe less than $25,000 including penalties and fees.

How it works

  • Complete IRS form 9465
  • Complete IRS form 433F
  • Call the IRS number shown on your tax bill and follow all instructions
  • You may also apply online
  • Pay the minimum monthly payment
  • File all requested tax returns and pay taxes in full and on time. If you are unable to do so, contact the IRS immediately.
  • All future refunds will be applied to your outstanding tax bill.

If at any time you are in danger of defaulting on your installment agreement, contact the IRS right away to make alternate payment arrangements.

The IRS will not initiate collection actions against you if:

  • An installment agreement is being considered
  • While an installment agreement is in effect
  • 30 days after an installment agreement request is denied
  • During the IRS review period for an appeal of a denied or terminated installment agreement

As with any IRS payment arrangement, it is crucial that you provide all requested documentation within the timeframe established by the IRS, and adhere to the agreement if it is approved.

If you experience any changes in your financial circumstances, notify the IRS right away to see if you are eligible to have your installment agreement amended to reflect your current financial scenario.

If for any reason you don’t receive your monthly statement, send your payment to the IRS address as stated on your installment agreement. Never skip a payment.

Dealing with the IRS on your own can be intimidating particularly if you’re unaccustomed to handling your own complex financial transactions.

When in doubt, enlist a licensed tax professional to help you determining your best course of action. Your tax pro will discuss all of your available options, negotiate with the IRS on our behalf, and ensure that your rights are upheld in any IRS tax proceedings.

 

 

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