IRS Installment Agreements

You can make monthly payments to the IRS through an installment agreement, if you can not pay all of your taxes.  However, you should know, that an Installment Agreement does NOT stop the penalties and interest.  The penalties and interest continue to occur, until the debt is paid in full.  The amount of the penalties and interest reduces, each time you make a payment, but they never go away, until the tax liability is paid in full.

RULES FOR AN IRS PAYMENT PLAN

**  BEFORE the IRS will consider a payment plan for you, you MUST file ALL past due tax returns.

**  All future refunds will be applied to your tax liability until it is paid.

**  Your payment must be at least $25 a month, and in most cases there is a fee for setting up an IRS Payment Plan.  You can pay the full amount within 120 days and avoid the IRS fee.


FEES FOR IRS INSTALLMENT AGREEMENT

**  $52 for a direct debit agreement
**  $105 for a standard agreement or payroll deduction agreement
**  $43 if your income is low.

ADDITIONAL RULES FOR INSTALLMENT AGREEMENT

If you owe $25,000 or less (total) you can pay the fee, request an Installment Agreement, and await the IRS's answer. Usually the answer is yes, unless you have defaulted on a previous Installment Agreement.  In the past the IRS has given taxpayers 60 months (5 years) to pay their tax bill.

You can apply online for an Installment Agreement, if you are sure that you owe less than $25,000.  No  harm to apply online.  However, if you owe more than $25,000 then you need help with Form 433-F.  It is NOT recommended that you complete Form 433-F without an experienced tax professional.  Once you sign a 433-F (like a financial statement)  its hard to change the figures, without raisin eye brows.  And, usually, the IRS will correct the 433-F in thier favor.  Example:  Cable is not considered a legal expense when determining the amount to be paid each month.

If the IRS is garnishing your wages, due to un-filed taxes, or substitute returns, you only have to prepare and file the un-filed tax returns in order to 1) lower your taxes, or/and  2) get an Installment Agreement.

If the tax bill is over whelming and you don't have a clue as to how you will ever get it paid, the you can consider an Offer in Compromise (OIC)  You can consider an OIC when an Installment Agreement just won't work, now or in the future.


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