IRS Payment Plans & Installment Agreements
If you have carefully evaluated other options first (such as an Offer in Compromise or Paying the Taxes & Interest in Full, while requesting penalty abatement) frequently setting up an Installment Agreement is a viable alternative.
The IRS will allow you to set up and make monthly payments through an installment agreement if you are not financially able to pay your debts as they become due. However, with an installment agreement, interest and penalties will continue to be accrued. Paying the tax in full or an Offer in Compromise will help avoid the additional cost and fees of setting up an Installment Agreement. If this is not an option to consider getting on a payment plan with the IRS you should:
- File all required tax returns.
- Consider a loan from other sources (banks, credit cards, friends/family etc.) to pay your tax bill in full to save you money.
- Calculate the highest monthly payment amount you can pay.
- Understand that future tax refunds will be applied to your open debt balance until it is paid in full.
To Apply for an IRS Installment Agreement
- Apply online at the IRS web site if you owe $25,000 or less in combined individual income tax, penalties and interest.
- Call the phone number on your IRS tax bill or notice.
- Complete and mail IRS Form 9465, Installment Agreement Request If you owe more than $25,000, you will also need to complete IRS Form 433-F, Collection Information Statement Both forms of which are available 24/7 on the IRS’s web-site.
To keep your IRS Installment Agreement in good standing and to avoid default you should:
- Pay at least your minimum monthly payment when it’s due (direct debit or payroll deductions make this easy).
- Include your name, address, SSN, daytime phone number, tax year and return type on your payment.
- File and pay all required tax returns on time.
- Continue to make all scheduled payments even if they apply your refund to your account balance; and
- Ensure your statement is sent to the correct address, contact the irs if you move or complete and mail IRS Form 8822, Change of Address
If you don’t receive your monthly statement from the IRS, send your payment regardless to the address listed in your agreement.
There may be a reinstatement fee if your agreement goes into default. Penalties and interest continue to accrue until your balance is paid in full. If you are in danger of defaulting on your payment agreement for any reason, contact the IRS immediately. The IRS will generally not take enforced collection actions:
- While an installment agreement is being considered.
- When an agreement is in effect.
- For 30 days after a request is rejected.
- During the period the IRS evaluates an appeal of a rejected or terminated agreement.
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