When you owe the government back taxes, you might wonder what steps to take to resolve your delinquencies. The Internal Revenue Service offers help for beleaguered tax payers through an installment program, allowing you to make payments instead of paying the whole amount at once. To request an installment plan, you will need to submit IRS Form 9465.
An Overview of Form 9465
While taxpayers usually submit this form with their tax return, you can file it at any time. If you owe the IRS less than $25,000, you can complete the application online. For any delinquencies over $25,000, you will also need to send in Form 433-F.
Eligibility
Anyone who owes less than $10,000 to the IRS qualifies for an installment plan, unless he or she has a previous installment agreement. You must pay off the total within 36 months. However, by paying a fee, you can request reinstatement if you default, and you generally have up to five years to pay.
When Not to Use Form 9465
You should not use Form 9465 if you have a current installment agreement. Instead, call the IRS at 1-800-829-1040 to make other payment arrangements. You should also contact the IRS if you are going through bankruptcy proceedings, since you might be eligible for an Offer In Compromise (OIC).
Disadvantages
The IRS charges an initial fee of $105 to set up these plans and about half of that when a person sets up automatic deductions. For people under a certain financial threshold, the fee drops even lower. If you let the agreement lapse and ask for it to be reinstated, you need to pay a $45 fee. In the meantime, penalties and interest accrue on the unpaid balance, which can add up to between 9 and 12 percent annually. Whenever possible, you should pay more than the minimum to defray these expenses.
Advantages
An installment plan allows you to pay off your debt and avoid collection from the IRS as long as you adhere to the agreement. In some cases, you might receive a six-month extension to file your taxes.
Making Your Payments
You have several options when making your payments:
- Deductions from a savings or checking account
- Cashier’s check or money order
- Personal checks
- Credit card or
- The electronic federal tax payment system.
The IRS has strict rules about making timely payments; fail to abide by these rules, and your agreement will default. If you opt to mail in your payments, we recommend that you send it about 10 days early in order to compensate for possible mail delays.
Call Our Office for Assistance
We realize that you might need help setting up a payment plan that is within your budget. For professional, skillful help dealing with your IRS debt strategically, call us at 720-398-6088.