If you should find yourself in a position where you owe the IRS a good deal of money – don’t panic. You’re not alone. There are a lot of people who face the same situation. It could be because they didn’t have the cash available to pay the bill at the time, forgot to file tax returns in past years, or simply filed incorrectly.
Luckily, the IRS has a simple way for you to pay your tax debt through their installment agreement plans. These IRS tax payment plans can help you avoid any unnecessary penalties and interest.
The first step before requesting a payment plan from the IRS is to file all required tax returns. This includes all related business and personal returns.
Some individuals and businesses may be able to apply online for a payment plan. This is the easiest way to make monthly payments to reduce your tax bill. You simply fill out the online application with your tax notice, bank account information, and the highest amount you will be able to pay monthly. To qualify for this type of tax installment plan, individuals must owe less than $50,000 and businesses must owe less than $25,000 in combined tax, penalties, and interest.
If you owe more than these limits, you can still pay in installments. However, you must go online to the IRS website and fill out Form 9465 (Installment Agreement Request) and Form 433-F (Collection Information Statement). Once you have them completed you’ll need to call the IRS phone number listed on your bill or notice.
A few other things you should know about tax installment agreements:
- In future years, any refunds will be applied to your tax debt until paid in full.
- You must pay at least your minimum monthly payment when it is due to avoid future penalties and interest.
- Be sure to include your name, address, SSN, phone number, tax year and return type on the payment.
- You must also pay all future tax returns on time or contact the IRS to modify your existing installment plan.
Overall, the best way to settle your tax debt is by contacting the IRS as soon as you get the notice. By talking and working on a payment plan with them, you will likely avoid collection actions. While it may be a little scary at the beginning, facing the situation is a lot easier than avoiding it. But if you get one of these notices and don’t know how to handle it, contact our office.