Can You Negotiate Another IRS Installment Agreement If You Owe Taxes From a Previous Year?

The unfortunate reality of tax debt is that it’s rarely resolved in one fell swoop. Even those fortunate enough to secure favorable installment plans may suffer additional tax debt in the future. After all, the financial issues that lead to those initial tax problems are unlikely to disappear immediately. Your failure to adjust your installment plan accordingly could lead to adverse action from the IRS, even if you make a point of paying previously agreed-upon installments on time. Thankfully, favorable options are available for handling both new and old tax debt, as outlined below:

One Installment Agreement at a Time

Technically, the IRS only allows you to maintain one installment agreement. Separate instances of back taxes cannot be treated separately for tax purposes. The good news? Tax debt from various years can be bundled into one overarching payment plan. For example, if you entered into an installment agreement in 2017 but also fell behind on taxes in 2018, the most recent tax debt can be bundled into your previous agreement.

An Increased Risk of Default

If you acquire a new tax balance after being approved for an installment plan, that additional balance could default the original agreement. Hence, the importance of taking action as soon as you become aware of your new tax debt. You may need to resubmit Form 9465, alongside a request to add debt from the new tax year. You can also seek an appointment at your local Taxpayer Assistance Center or work with an enrolled agent to secure an agreement that reflects your new financial reality.

No matter your current tax situation, you can benefit from the expertise of the Highland Tax Group. We will help you determine which IRS installment agreement is the best fit. Contact us today at 720-398-6088 to learn more about your options for tax relief.

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