How to Set Up a Payment Plan With the IRS
Step 1: Determine Your Eligibility
The first step in determining eligibility is to determine how much is owed and whether all tax returns have been appropriately filed for all prior tax years.
You must file all prior tax returns in years that taxes may be owed, or appear to potentially have taxes owed. In many cases, you may be unaware of outstanding tax debt or unfiled tax returns that exist for prior tax years. If you owe taxes and have not filed your tax returns, you will not be able to apply for an installment agreement with the IRS.
Once all the tax returns have been filed, the returns must be both processed by the IRS and posted to your account. Once posted, you should recalculate the accuracy of penalties and interest that have been assessed for each tax period. In certain cases, the penalties that were assessed may have been incorrectly calculated or may be able to be waived if certain conditions existed. In many cases, it’s not the taxes that get you – it’s the penalties and interest.
Step 2: Gather the Information You Will Need
To obtain payment plans with the IRS you will need to know the social security or tax identification number and dates of birth for each taxpayer on the return. If you received a letter or IRS notice on taxes that are owed, you should have this notice available to know how best to route your call to the appropriate department. Third, you should have a copy of your tax return, or PIN. Fourth, you should determine exactly how much is the greatest amount you can pay now and in future installments.
Step 3: Determine the Need for a Tax Resolution Specialist
In the most simplest cases where the taxpayers owe less than $10,000 for a single tax year and whose intention is to fully pay the tax obligation over the next 48 months, you may be able to simply call the collections division of the IRS and request payment plan for IRS.
In cases where your tax debt exceeds this amount, you may be better off by hiring the services of a paid, tax resolution specialist to get you the best terms and conditions you can get. The cost of the services will vary depending upon the type of taxes you owe, how much you owe, how fast you can pay down your tax debt, how much you will be paying every month and whether or not you are an employee, self-employed or an employer. For taxpayers that are not self-employed or an employer, the fees range from $375 to $1,250 in most cases. More complex agreements where the taxes owed are large, or the taxpayer is self-employed or an employer can be greater.
Step 4: Enter Into an Installment Agreement
Entering into an installment agreement is fairly simple once the terms are defined. To obtain an IRS payment plan, you must complete the Installment Agreement (Form 9465). You will be required to make your first payment in the current month and a monthly recurring payment thereafter. Your monthly payments can be paid by check, charge card or directly debited from your bank account. Your payments will continue until such time that all the payments are paid and no further balance is owed.