If you owe money to the Internal Revenue Service (IRS) but cannot pay the full amount all at once, you may be able to set up an installment agreement. This can make it easier for you to pay off your debt in manageable amounts over time.
Here’s how to set up an installment agreement with the IRS:
1. Determine if you are eligible
Before you set up an installment agreement, you need to determine if you are eligible. You must meet the following requirements:
– You owe $50,000 or less in combined tax, penalties, and interest
– You have filed all required tax returns
– You can pay off the debt in full within 72 months
– You are not currently in an open bankruptcy proceeding
If you meet these requirements, you can move on to the next step.
2. Choose a payment plan
There are several payment plans available for installment agreements. The most common option is a monthly payment plan, where you make a set payment each month until the debt is paid off.
You can also choose a partial payment installment agreement, where you pay a portion of the debt each month. This option is usually only available if the IRS determines that you cannot pay the full amount.
Another option is a streamlined installment agreement, which allows you to request an agreement without providing a financial statement or substantiation. This option is only available if you owe less than $50,000 and can pay off the debt within 72 months.
3. Apply for the installment agreement
To apply for an installment agreement, you can:
– Apply online using the IRS Online Payment Agreement tool
– Complete Form 9465, Installment Agreement Request, and mail it to the address on the form
– Call the phone number on your IRS notice or bill and request an agreement over the phone
When you apply, you will need to provide information about your income, expenses, and assets.
4. Wait for a response from the IRS
After you apply, the IRS will review your application and either accept or reject it. If your application is accepted, the IRS will send you an acceptance letter outlining the terms of the agreement.
If your application is rejected, the IRS will send you a letter explaining why it was rejected and what you can do next.
5. Make your payments
Once your installment agreement is set up, you need to make your payments on time each month. If you miss a payment, the IRS may terminate the agreement and take collection action against you.
In conclusion, setting up an installment agreement with the IRS is a manageable way to pay off your debt over time. If you meet the eligibility requirements, choose a payment plan, apply for the agreement, and make your payments on time, you can successfully pay off your debt to the IRS.