Owing the IRS money is never a good feeling, especially if you are unable to pay your taxes. Ignoring your tax debt, however, is not really an option. The IRS will take action to collect the debt through tax liens, tax levies, and/or wage garnishment. Thankfully, there is a solution for tackling your tax debt – an IRS payment plan. With an approved IRS installment agreement, you’ll be able to stretch your payments out over time, giving you the breathing room you need. Depending on your situation, you may qualify for one of the following IRS payment plan options.
Short-Term Payment Plan
This is basically a payment extension, allowing taxpayers to pay the debt within 180 days.
Long-Term Payment Plan
Available to individual taxpayers and businesses. Payments are stretched over 120 days or longer.
If you are approved for a payment plan, additional collection action will not be taken against you, as long as you make your payments on time. Penalties and interest, unfortunately, will still accrue until the debt is paid in full.
How to Set Up an IRS Payment Plan
Before you can request an IRS payment plan, all of your tax returns must be up to date. Be sure to submit any unfiled tax returns immediately, or your application will be denied. Once your tax returns are complete, you can apply for an IRS payment plan by submitting Form 9465 (Installment Agreement Request) through the mail or by accessing it online. The type of payment plan you request, and the length of your IRS installment agreement, will vary based on the amount you owe.
$10,000 or Less
If your tax debt is below $10,000, the IRS will generally approve your installment agreement request without any significant financial information required. You’ll have up to three years to pay off your taxes, with no set minimum monthly fee.
Balances of $10,000 to $25,000
For balances between $10,000 and $25,000, you’ll have up to six years (72 months) to pay your tax debt, if approved. The monthly payment is equally divided over the length of the agreement.
Balances of $25,000 to $50,000
If your tax debt falls between $25,000 and $50,000, you’ll be required to provide more financial information than those who have lower debt thresholds. The repayment period is 72 months.
$50,000 or More
For tax debt exceeding $50,000, the IRS will require more detailed information regarding your ability to pay. This includes your assets, investments, bank accounts, and income (Form 433-F). In some instances, you may have to sell your assets to pay down the debt before an agreement is approved. The length of your payment plan and the amount you pay monthly, however, is specific to your case.
At Tax Defense Network, we’ve helped thousands of taxpayers get back on track with an affordable IRS payment plan. Give us a call today to see how easy it is to get started.
Tax Defense Network
“My family has been using Tax Defense Network for more than a year, and we are absolutely amazed by their abilities. We had a big mess of years of unpaid taxes, and TDN helped us file everything and negotiate payment plans with the state and IRS. By the end of our time with TDN, they had saved us tens of thousands of dollars and made a big difference in our quality of life. I would recommend anyone to TDN, no matter how big the tax issue!”
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Common Questions About IRS Payment Plans
Can I apply for an IRS payment plan online?
Yes. If your tax debt balance is below $50,000 (including penalties and interest), the IRS has an online payment agreement application that you can use to get immediate notification if you’ve been approved for a payment plan. Depending on the type of plan you’re approved for, you could also be charged a setup fee.
If your debt is above $50,000, you won’t be able to use the online application. Instead, you’ll need to complete Form 9465, Installment Agreement Request Form, and Form 433-F, Collection Information Statement. You’ll need to send these completed forms to the IRS to finish your application.
How do I make my installment agreement payments?
There are many ways to pay the IRS:
IRS Direct Pay: This method can be used for filing individual tax bills or making estimated tax payments directly from your bank account (checking or savings) to the IRS. To use Direct Pay, you need to have a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). There is no additional cost to pay via Direct Pay. You’ll receive confirmation that your payment has been submitted. The bank account information you provide is not stored in the IRS systems.
Electronic Federal Tax Payment System (EFTPS): Both businesses and individual taxpayers can use EFTPS to make income tax payments, employment tax payments, and estimated and excise tax payments. The site is available 24/7 and can be accessed via computer or smartphone. Additionally, you can schedule payments for up to 365 days in advance. To access the EFTPS website, you must have a secure Internet browser with 128-bit encryption. Use the following three items to sign up:
EIN or SSN
EFTPS Personal Identification Number
Internet password
Payment by Check or Money Order: If you choose to pay via mail, then you can make your check, money order or cashier’s check payable to the U.S. Treasury. Include your name, address, SSN, daytime phone number, tax period, and the tax notice or form number on your method of payment. Do not affix your check or money order to other documents.
Payment by Debit or Credit Card: To process payments made by debit or credit cards, the IRS uses standard service providers and business/commercial card networks. There is a processing fee (amount varies by provider), which may be tax-deductible. The IRS does not charge any fee for the transfer or the processing of the payment.
If you are unable to make any payments, you shouldn’t request an IRS payment plan at this time. Depending on your situation, there could be other tax relief available to you. Give us a call and we can review all your available options.
What is the phone number to request an IRS payment plan?
Individual taxpayers can contact the IRS at 800-829-1040. If you need help with an installment agreement for your business, you can call 800-829-4933.
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