Are you struggling to settle your tax debt with the IRS? If so, an installment agreement may be a viable option for you. An installment agreement is a payment plan that enables you to spread out your tax debt over a more extended period. This option can be ideal for taxpayers who are unable to pay their tax debt in full at once.
If you are looking to enter into an installment agreement with the IRS, you need to follow these essential steps:
1. Determine your eligibility
The IRS has specific requirements that you must meet to be eligible for an IRS installment agreement. For example, you must be a current taxpayer who has filed all your tax returns for the past five years. You must also owe less than $50,000, including penalties and interest, and be able to pay back the amount owed within six years.
2. Determine the type of agreement to apply for
The IRS offers different types of installment agreements, depending on the amount you owe and your financial situation. Some of the common installment agreements are:
– Guaranteed Installment Agreement: This is an agreement for taxpayers who owe less than $10,000, and the IRS automatically approves it if you meet the eligibility requirements.
– Streamlined Installment Agreement: This agreement is for taxpayers who owe between $10,000 and $50,000 and cannot pay their tax debt within 120 days.
– Non-streamlined Installment Agreement: This is for taxpayers who owe more than $50,000 and have complex financial situations.
3. Submit an application
Once you have determined the type of agreement to apply for, you can proceed to submit an application. You can either do it online through the IRS website or by filling out Form 9465, Installment Agreement Request.
When submitting the application, ensure that you provide accurate and up-to-date information that reflects your current financial situation. If you have any outstanding tax returns, ensure that you file them before submitting your application.
4. Wait for the IRS to review your application
After submitting your application, the IRS will review it and may request additional information or clarification. It is essential to respond promptly and provide all the requested information.
If your application is approved, you will receive a notice with the terms of the agreement. Ensure that you read and understand the terms before accepting the agreement.
5. Make timely payments
Once you have entered into an installment agreement with the IRS, it is your responsibility to make timely payments. Failing to make payments can result in penalties and interest, and the IRS may also revoke your agreement.
In conclusion, entering into an installment agreement with the IRS can be an excellent option for taxpayers struggling to settle their tax debt. Ensure that you meet the eligibility requirements, determine the type of agreement to apply for, submit an accurate application, and make timely payments. With proper adherence to these guidelines, you can successfully settle your tax debt with the IRS.
