Paying New IRS Debt When You Have a Balance: Part I

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What to Do When You Owe the IRS for 2021 — And You Already Have a Balance: Part I

Tax debt can easily get out of control, even when you make every effort to pay up. Unfortunately, the solutions you find for a particular year might not keep you out of trouble later.

You may be discovering this unfortunate reality first-hand as you prepare to deal with your 2021 taxes, despite already owing the IRS. It’s easy to feel discouraged; after all, if you previously arranged for installments, you “agree[d] to meet all your future tax obligations.” Your inability to abide by this could throw your entire installment plan into question.

Thankfully, options are available for adjusting your installment agreement when you once again owe the IRS. In this three-part guide, we’ll explain how you can deal with multiple years’ worth of IRS debt.

Multiple Installment Agreements Are Not Allowed

Many taxpayers assume that they can tackle multiple debt issues simultaneously by maintaining more than one installment agreement. In reality, however, a new installment agreement will always place the previous agreement in default. You cannot simply open up a new agreement, but you may be able to amend the previous one.

Amending an Installment Plan Via Form 9465

The process for updating your installment agreement based on new taxes begins with Form 9465. You may have completed this form when initially seeking an installment plan. This time, you will enter the current year’s tax obligations in line 5, accompanied by previous tax balances in line 6. As the document explains, this figure should be highlighted “even if the amounts are included in an existing installment agreement.”

No matter the scope of your IRS debt, you can count on the Highland Tax Group to help you find a positive outcome. Contact us today to learn more about your options for resolving your tax debt.