Installment Payment Plan
Debt under $25,000 easily qualifies for a payment plan, but debt over $25,000 must be negotiated. A payment plan has the downfall of penalties and interest accumulation during payment which could take years to pay off.
IR Code 6502 allows ten years for the IRS to collect tax money. To get an IA, the IRS will grant you the extension if you sign Form 900. Delay the process by first speaking to a tax advisor. The IRS may not remember to give you the form; in those cases, make sure you request a Form 900. If you don’t sign the form, you don’t get an installment agreement.
Negotiating Monthly Payments
If you can’t pay your tax in a maximum of three years or you owe in excess of $25,000 ask for a monthly payment plan and complete Form 433-A or –B. Each revenue officer will come to a different conclusion on how much you should pay.
Strategies to get a payment plan:
- Tell them what payments you can afford when handing in Form 433- A or -B.
- Commit to paying less for income essential living costs only, i.e. amount IRS states you can afford after essentials. You offer to pay lowest amount as it’s hard to revise once you sign installment plan.
- If you have $0 or a minus amount contemplate an Offer in Compromise, collection suspension, or bankruptcy.
- Make an initial payment when you suggest an agreement. Continue the payments regardless if the IRS permitted your IA. Paying a set amount, in a timely matter, for three months may convince the officer that the payment plan and amount is right for you. If you don’t have the means to start immediate payments, a check that is postdated may be accepted.
Tax bills higher than $25,000 must be approved by a manager, not a tax officer. If an IA is approved it could take months to get it in writing.
If You Can’t Fulfill your Installment Payment
Being unable to fulfill a monthly payment requires an exceptional reason such as disability or loss of employment. Call 800-829-1040 for help and also contact the relevant tax officer. If the IRS doesn’t agree, they can start procedures to seize your property; contact the Taxpayer Advocate Service.
An appeal against a revocation can be restarted but the IRS is usually not compliant if the amount is more than $10,000. You must supply new documentation showing your changed circumstances, affecting income and living costs. During the new process for an IA, the IRS may take wages and accounts.
