Owe Back Taxes?

Let say if I owe IRS $60,000.00 in total and I wanna do the installment plan, how much roughly I will need to pay per month?

Any related information would help, thanks.

Can I Get an IRS Installment Agreement? Why won’t they let me pay over time?

IRS Installment Agreement

If you cannot pay the IRS in full, but will have the money to do so over time, you can request an IRS installment agreement. This is a way to pay your debt over the course of many months instead of being forced to part with a large lump sum upfront. The more you know about an IRS installment agreement and how it works the better chance there is that you will rely on this if the time ever calls for it.

There are many different types of IRS installment agreements. To go along with this, it is important to be aware of the requirements of each one. Even though most can receive an installment agreement from the IRS, it is not guaranteed.

First off, an installment agreement is the most common way for a taxpayer to pay debt to the IRS. If you owe less than $25k it is usually very easy to receive an IRS installment agreement. If you owe more than this it can often times be difficult to receive a payment plan – although it is far from impossible.

To get started, you need to fill out and submit an Installment Agreement Request Form, IRS Form 9465. Even if you do not know much about the tax code you should be able to accurately fill out this form. Most of the information pertains to your particular tax situation, and does not require that you know much else.

You have other options for setting up an IRS installment agreement. You can use the internet using the Online Payment Agreement Application. Or you can get started over the phone, and complete everything else once it arrives in the mail.

Within 30 days of receiving your request the IRS will either accept or deny your installment agreement. In some cases, the IRS has to accept your offer. This is when you owe less than $25k, and your monthly payments will allow you to get rid of your debt in five years or less.

If you owe more than $25K in tax debt to the IRS it is likely that they will require more financial information from you in order to approve your installment agreement. The main difference between applying for an installment agreement when you owe over $25K is that you will be required to complete form 4330F, The Collection Information Statement. This document is a bit tedious to fill out and it requires that you provide the IRS with detailed information about your finances. The IRS is much more hesitant to approve installment agreements when over $25K is owed and it is highly suggested that you use a tax professional to help with your filing to ensure it is accepted by the IRS.

Installment agreements are a great settlement alternative offered by the IRS. If you cannot pay your taxes in full this is the one of the first types of settlements you should consider. If you cannot make the required monthly payments for an installment agreement then it is important to talk with a tax debt professional to come up with a different tax settlement method.

If you are unable to pay the full taxes at one go, it is best to apply for an installment agreement in Form 9465. This can be done online, if the tax dues are less than $25,000.

For higher tax dues you will have to fill up Collection Information Statement as well in Form 433F and may have to visit the tax office. You can also call the IRS and explain your problem to them who will then guide you in the matter.

Remember, however, to file all the back returns, if not filed, as that is a necessary precondition for granting installments.

Apart from the Collection Information Statement, the IRS may also require you to furnish copies of supporting documents. Based on the details provided of the assets and income, the IRS determines the quantum of monthly installment and the number of months for which the installments are to be paid.

This is an area of negotiation. The IRS may ask you to modify the proposals and even refuse to accept your proposal.

It needs to be remembered that the law allows only a ten year period to the IRS for collecting the dues. The time is to be measured from the date of assessment leading to the demand. However, the tax payer has the power to extend this time and if he does so, the IRS may be willing to allow installment payment beyond the ten year period.

It is in the interest of the tax payer, however, to pay the demand as early as possible. This is because interest continues to accumulate on the unpaid amount during the installment period.

Delayed payments of tax also invite penalty, though it may be possible to seek their abatement if the delay is for bonafide reasons. Considering the cumulative impact of interest and penalty, tax payers may be better off by borrowing money and paying taxes at the earliest.

The mode of payment of tax is another area of negotiation. The IRS prefers that taxes be paid by way of payroll deduction from the wages or by way of direct debit from your bank account.

This may also be in the interest of the tax payer as it makes for regular payment which enables the continuance of installment agreement. In case of default, the installment agreement may be canceled and the tax payer may be subjected to coercive recovery action such as wage garnishment and bank levy.

I received a full refund and have been making installment payments for more than a year, but others on here say the IRS will take the refund and apply it to your balance. I’m confused!

Can I Get an IRS Installment Agreement? Why won’t they let me pay over time?