The IRS offers only four types of installment agreements. While this may not seem like much, they're designed to offer as much flexibility as possible. If one type doesn't fit, there are three others that can be chosen from.
The Different Types of Installment Agreements
The first one is for those who owe under $10,000, called the guaranteed installment agreement. If you can pay off the debt in three years or less, you can get into a guaranteed installment agreement. Fill out form 9465, available at www.irs.gov, and follow the instructions included with the form. Certain criteria need to be met in order to qualify.
- You are current with your taxes for the last five years. All previous years must be filed. You cannot file a missing year and still obtain an agreement.
- No previous installment agreements. There can be no previous agreements entered into during the past five years.
- You agree to abide by all IRS laws.
- Provide all information needed by the IRS to determine that you cannot pay the balance due within 120 days post-filing.
The second agreement is called the streamlined installment agreement. It is similar to the guaranteed version with the exceptions being that the limit goes up to $25,000 and you have up to five years to pay the balance due. All other instructions are the same. The major difference is that the IRS will not seek out a lien against your property as insurance of payment.
A third agreement is called the partial payment installment agreement, also known as the PPIA. This give the taxpayer the option to pay the amount that they can afford as opposed to an amount stipulated by the time allocated. Use form 433-D to request this agreement. Instructions on the form explain the terms of the agreement and why they must be followed.
What to Expect When Applying
There are terms that apply to an IRS installment agreement. In some situations, the IRS may ask you to fill out a form 433-F, which is for verifying your income. It needs to be demonstrated that you cannot pay the entire amount owed at the time of filing or within 120 days. In cases where the amount is over $25,000, a lien may be filed against your property. Processing time usually takes up to 30 days after the request is made. It may take up to 45 days if the form is processed after March 30th. There are fees associated with every agreement. Anything under $25,000 will be charged $52 for automatic debit and $105 for having a check mailed in every month.
Working With a Tax Attorney
Owing the IRS money usually means that you're not using the correct withholding amount from your paycheck. Consult with a tax lawyer going forward to ensure that you won't owe at the end of the year. They can also work for you as power of attorney, meaning that they'll deal with obtaining a favorable IRS installment agreement for you.
