| So you find yourself with an IRS debt and you don't | | | | ? You must be current on all your tax returns. |
| know how to pay it back. | | | | ? If self employed, you must be current on your |
| Installment agreements are perhaps the most widely | | | | quarterly estimated tax payments for the current year. |
| used method for paying past tax debts. | | | | ? If you have employees, you must be current on your |
| If you cannot afford to pay your tax liability in full, the | | | | payroll tax and Form 941 filings. |
| IRS may enter into an installment agreement with you. | | | | ? You must make all installment payments on time. |
| This will allow you to pay off your tax liability through | | | | ? You must also file all tax returns and make tax |
| monthly payments or installments. Installment | | | | payments including any estimated tax payments or |
| agreements may pay all (full pay) or part (partial pay) | | | | Federal Tax Deposits during the term of the |
| of your past tax liability. | | | | agreement on time. |
| If you cannot pay the amount you owe within 60 | | | | Once you have been approved for an installment |
| months, you must file Form 433-A or 433-B. The IRS | | | | agreement, the interest and penalties continue to |
| will analyze these forms and use the information to | | | | accrue on the unpaid portion of back tax liability |
| determine the amount you can pay. | | | | throughout the duration of the installment agreement till |
| The IRS has the discretion to decide on the payment | | | | you pay off your entire tax debt. |
| amount and will usually, negotiate with you in food faith. | | | | The interest is adjusted quarterly and combined with |
| The IRS will consider your financial situation and assets | | | | penalties, the rate is about 15% per year. In most |
| while negotiating with you. You will typically not be | | | | cases, you could end up paying more than what you |
| approved for an installment agreement if you have | | | | owed at the beginning. You will be charged interest |
| money or assets that IRS deems unnecessary to live | | | | and a late payment tax penalty by the IRS on the tax |
| on. | | | | not paid by April 15th, even if your request to pay tax |
| The IRS will usually inform you within 30 days whether | | | | in installments is granted by the IRS. |
| or not your request has been accepted or denied or if | | | | Once you enter into an installment agreement, the IRS |
| any additional information is required to be submitted | | | | will suspend all collection efforts and will stop issuing |
| by you. | | | | wage garnishments, bank levies and notices. |
| If the IRS approves your request, you will be required | | | | Depending on the circumstances, the IRS may file a |
| to pay a one time fee of $105. | | | | Notice of Federal Tax Lien to protect its interest until |
| Requirements for Receiving an Installment Agreement | | | | you pay the liability in full. |