Can’t Pay Your Taxes? Want to know “Can I get a payment plan for my tax debt?”
If you owe more in taxes than you can pay, or if you owe a back tax bill that is more than you can afford, then it is possible to make payment arrangements with the IRS to pay your debt in installments. This is known as an IRS installment agreement. Most state tax authorities or departments of revenue offer similar options to make payment arrangements. For an IRS installment agreement, if you can afford to make the minimum payment plan, the request is made on the Form 9465, Installment Agreement Request.
These payment plans come with several rules, however, making it necessary to understand what you are agreeing to. In addition to charging interest and fees on the amount owed, there are serious consequences to missing a payment.
How can I get an installment agreement for my tax debt?
When you cannot pay the amount that you owe to the IRS, there are ways to make payments as part of an installment plan. These plans are governed by several restrictions, however. In order to qualify, you must meet these conditions:
- You must be current on this year’s taxes. This includes filing for all prior years in which you had a filing requirement, your quarterly estimated tax payments, and any payroll taxes that you must pay for your employees.
- You must owe less than $50,000.
- You must be able to pay the total amount in six years (72 months) or less.
If you can’t meet these conditions, it is still possible to pay in installments, but the case must be analyzed individually. Often, these cases are good candidates for negotiation. Talk to an Enrolled Agent such as the EAs at Samaritan Tac Relief who have experience dealing with the IRS if you find yourself in this situation. A good tax Enrolled Agent can help you through the negotiation process and may even be able to lower the total amount of what you would pay.
Installment agreement terms are based on the total amount owed. However, if you can prove to the IRS that you can’t pay the total amount of the debt in six years, then it’s possible to negotiate a settlement, ask for a suspension of collection activities (known as currently non-collectible status) or file for bankruptcy.
This is based on details you provide to the IRS regarding your income and assets. Before starting on any of these options, however, it’s a good idea to consult a tax resolution specialist, such as Samaritan Tax Relief, who can help guide you through the process to make sure that your interests are protected.
Who decides how much I have to pay?
The IRS typically bases the decision of how much you have to pay each month on the information you provide to them in an installment agreement request. If you are unable to pay the statutory minimum payment about based on your debt, the amount can be based on your discretionary income; the amount you have left over after paying your bills every month. It’s important to note that the IRS tends to label many expenses as discretionary. Money that is being used to pay private school tuition, cable TV, or dine in restaurants is usually viewed as a discretionary expense.
If the IRS decides that you have to pay more than you reasonably can every month, it is possible to appeal the decision. Because these appeals can be time consuming, however, many people choose to hire an Enrolled Agent (EA) before they apply for an installment agreement in order to ensure that the result is something that they can reasonably pay.
IRS Payment Plan Fees and Interest
Installment plans with the IRS almost always come with fees, penalties, and interest. At the time that you negotiate your installment plan, the amount of penalties and the interest that you owe will be determined in accordance with the current laws.
It’s important to realize that while it’s very unlikely that you will avoid paying any fees or interest, it may be possible to negotiate a lower rate or reduced penalty. You might want to consult with your Enrolled Agent representative to see if you can qualify for a reduced rate.
What happens if I can’t pay my installment agreement?
If you are unable to make payments on an installment agreement, it’s possible to offer a compromise settlement, ask that collection activities be suspended, or file for bankruptcy. In all of these cases, it’s important to understand the consequences of these decisions. An Enrolled Agent can help you to decide the right course of action.
If you find yourself unable to make payments after your installment agreement has started, it’s possible that the installment agreement can be revoked. Fortunately, the IRS typically waits between thirty and sixty days before deciding to revoke an installment agreement, so you will have some time before you have to make your payment.
If you cannot make the payment, it is possible to ask for a change in your payment plan. Typically, these are granted in cases where there has been a significant change in income or financial circumstances.
Samaritan Tax Relief Representation
One of your most important rights as a taxpayer is your right to have a qualified tax resolution professional, such as an Enrolled Agent (EA), represent you in front of the IRS and/or States and provide tax resolution for your tax lien.
When you hire Samaritan Tax Relief to assist you, we will guide you through the process of requesting an installment agreement while advocating on your behalf and protecting your interests.
Samaritan Tax Relief is here to help you because when you’re dealing with requesting an IRS or state payment plan, the worst thing you can do is to do nothing at all and not making payment arrangements for your IRS debt. The best decision is to take the necessary first step and to address your tax liability now!
Click on the “Get Help” button at the top of the page to take that first step.