IRS Installment Agreements
What Is A Guaranteed Installment Agreement?If you meet the following criteria, you don't need help from Fresh Start Tax Relief or anyone else. Simply go to the IRS.gov website and set up your Installment Agreement online. According to IRS.gov, the Guaranteed Installment Agreement criteria are:
- The tax you owe is not more than $10,000;
- During the past 5 tax years, you and your spouse (if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an Installment Agreement for payment of income tax;
- The IRS determines that you cannot pay the tax owed in full when it is due. You will be required to provide the IRS any information it request in order for a determination to be made;
- You agree to pay the full amount you owe within 3 years. You must also comply with all applicable tax laws while your Installment Agreement is in effect.
How Do I Set Up an IRS Installment Agreement?Most delinquent taxpayers are eligible to set up their Installment Agreement online or through a simple phone conversation with an IRS representative. Others, however, may need to be set up with a local Revenue Officer. The trade secret of the day is that most IRS Installment Agreements are not difficult to obtain.
The IRS' website, IRS.gov, has a wealth of information available on the criterion necessary to qualify for a formal, monthly Installment Agreement and how to set one up. Fresh Start Tax Relief will investigate the accrual of your tax debt, tell you which Installment Agreement(s) you may qualify for, and how to go about setting it up. We'll also tell you the best way to request the reduction or removal of IRS penalties.
What Types of IRS Installment Agreements Are Available?The IRS has several different Installment Agreement options available to delinquent taxpayers.
- Guaranteed Installment Agreement (see above)
- Streamlined Installment Agreement
- Non-Streamlined Installment Agreement
- Fresh Start Installment Agreement
- Partial Payment Installment Agreement
- Direct Debit Installment Agreement
Which IRS Installment Agreement option you qualify for depends on several factors, including the amount of back tax you owe, the type of back tax you owe, your ability to pay monthly, your equity in assets, and more. IRS form 9465 may be used in certain cases to request a formal monthly Installment Agreement to satisfy your tax debt over time. The Service also allows most individual taxpayers who owe personal income tax of up to $50,000, 72 months to pay back the tax owed through a formal agreement with few questions asked.
Partial Payment Installment AgreementA relatively recent addition to the IRS Installment Agreement family of options is the Partial Payment Installment Agreement (PPIA). This allows delinquent taxpayers to make a low monthly payment toward their back taxes that will not pay back the total tax debt within the IRS' ten-year time limit to collect the tax.
The PPIA is a bit more difficult to obtain than other IRS Installment Agreements, however, due to the reduced payment amount. The Service will ask for detailed financial information forms (including IRS Forms 433-A or 433-F) and a wealth of supporting documentation before a determination will be made.
Keep in mind that if the IRS grants you a PPIA, your Agreement will be reviewed every two years to determine that the PPIA is still the Service' best means of collecting your back taxes.
What Else Should I Know About IRS Installment Agreements?In some cases, the IRS may not file a tax lien if you enter into a formal Direct Debit Installment Agreement. Note that the IRS charges a user fee to set up an Installment Agreement. The amount of the fee depends on the type of Installment Agreement and is typically deducted from your first payment.
The IRS also charges a reinstatement fee to re-establish an Installment Agreement that has defaulted. This fee may be deducted from your first payment after reinstatement. You may be able to set up a Payroll Deduction Agreement using IRS form 2159. In general, the IRS will not take enforced collection action such as bank levies and seizures:
- When an Installment Agreement has been requested and the IRS is considering it;
- While an Installment Agreement is in effect;
- During the 30-day period following the rejection of an Installment Agreement request;
- During the period of time IRS Appeals evaluates a terminated or rejected Installment Agreement.
Your IRS Installment Agreement will default if:
- You do not pay your minimum monthly payment in full when it is due;
- You do not file all required tax returns timely with full payment;
- You do not pay all taxes you owe in full and on time;
- You do not provide financial information when requested.
To help avoid potential problems that cause the termination of Installment Agreements, always contact the IRS if you move, or complete and mail IRS form 8822, Change of Address.
- The minimum IRS Installment Agreement payment is $25;
- Use IRS form 433-D to request a Direct Debit Installment Agreement;
- Getting a loan or using a credit card to pay your IRS tax debt may be a better financial option than paying the IRS through a monthly Installment Agreement.