We've all been there: tax season comes around, and suddenly you realize you owe more to the IRS than you can comfortably pay right now. Don't panic! The IRS understands that financial difficulties happen, and they offer various payment options to help you get back on track. This comprehensive guide will walk you through everything you need to know about contacting the IRS for a payment plan, ensuring you take the right steps to avoid further penalties and stress.
Understanding Your Options: What Kind of Payment Plan Do You Need?
Before you even think about contacting the IRS, it's crucial to understand the different types of payment plans available. This will help you determine the best approach for your specific financial situation.
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| How To Contact Irs For Payment Plan |
Short-Term Payment Plan (Up to 180 Days)
If you believe you can pay your full tax debt, including penalties and interest, within 180 days or less, this might be the right option for you. There's generally no setup fee for this plan when applying online, by phone, or in person. However, interest and penalties will continue to accrue until the balance is paid in full.
Long-Term Payment Plan (Installment Agreement)
This is a more structured monthly payment plan that allows you to pay your tax debt over a longer period, typically up to 72 months (6 years) for individuals. If your total combined tax, penalties, and interest are less than $50,000 for individuals or less than $25,000 for businesses (from the current and preceding tax year), you may qualify for a streamlined installment agreement.
There are fees associated with setting up a long-term payment plan, which vary depending on how you apply and your payment method:
- Direct Debit Installment Agreement (DDIA - automatic monthly payments from your checking account):
- Apply online: $22 setup fee.
- Apply by phone, mail, or in-person: $107 setup fee.
- Low-income taxpayers: Setup fee waived.
- Non-Direct Debit Installment Agreement (manual payments):
- Apply online: $69 setup fee.
- Apply by phone, mail, or in-person: $178 setup fee.
- Low-income taxpayers: $43 setup fee, which may be reimbursed under certain conditions.
Important Note: Penalties and interest will continue to accrue until your tax debt is paid in full, regardless of the payment plan you choose.
Offer in Compromise (OIC)
An OIC allows you to settle your tax debt for less than the full amount you owe. This is typically an option if you're facing significant financial hardship and genuinely cannot pay your full tax liability. The IRS generally approves an OIC when the amount you offer represents the most they can expect to collect within a reasonable period. This is a more complex process and often requires providing detailed financial information.
Tip: Read the whole thing before forming an opinion.
Step 1: Assess Your Financial Situation and Gather Information
Ready to take control of your tax debt? Excellent! Let's begin by getting a clear picture of your finances.
Before you contact the IRS, you need to understand exactly what you owe and what you can realistically afford to pay. This preparation will make the process smoother and more efficient.
Sub-heading: Determine Your Exact Tax Liability
- Review Your Tax Notices: The IRS will send you notices if you owe taxes. These notices (like CP14, CP2000, or a bill) will state the amount you owe, including any penalties and interest. Keep these handy!
- Check Your IRS Online Account: If you have an online account with the IRS, you can easily view your tax balance, payment history, and payment plan details. This is an excellent resource for up-to-date information. If you don't have one, consider setting it up – it's a valuable tool.
- Look at Your Filed Returns: Refer to the tax return for the year(s) you owe money. This will confirm the original amount of tax due.
Sub-heading: Analyze Your Income and Expenses
The IRS will want to know your financial capability to pay. Be prepared to provide details about:
- Your Gross Monthly Income: This includes wages, self-employment income, benefits, and any other sources of income.
- Your Monthly Living Expenses: This includes housing, utilities, food, transportation, healthcare, and other necessary expenses. Be realistic, but also be prepared to justify your expenses if they seem unusually high.
- Your Assets: While less critical for basic installment agreements, for an OIC, you'll need to disclose assets like bank accounts, investments, and real estate.
Sub-heading: Consider How Much You Can Afford Monthly
Based on your income and expenses, determine a realistic monthly payment amount that you can commit to without creating further financial hardship. Having a proposed payment amount in mind before contacting the IRS will demonstrate your proactive approach.
Step 2: Choose Your Contact Method
The IRS offers several convenient ways to apply for a payment plan. The best method for you will depend on the type of plan you need, the amount you owe, and your comfort level with technology.
Sub-heading: Online Payment Agreement (OPA) Tool
This is often the quickest and easiest way to set up an installment agreement for individuals.
QuickTip: Reread tricky spots right away.
- Eligibility:
- Individuals who owe a combined total of less than $50,000 in tax, penalties, and interest.
- Businesses (including sole proprietors) who owe a combined total of less than $25,000 in tax, penalties, and interest from the current and preceding tax year.
- You must have filed all required tax returns.
- How to Use It:
- Create or Sign In to Your IRS Online Account: You'll need to verify your identity, which may involve setting up an ID.me account. This step is crucial for secure access.
- Navigate to the Online Payment Agreement Tool: Once logged in, you can access the OPA tool.
- Follow the Prompts: The tool will guide you through the application process, asking for your tax information and allowing you to propose a monthly payment amount and due date.
- Receive Immediate Notification: For many, the approval is immediate.
Sub-heading: By Phone
If you prefer to speak directly with an IRS representative or if you don't qualify for the online tool, calling is a good option.
- Individual Taxpayers: Call the IRS at 1-800-829-1040.
- Business Taxpayers: Call the IRS at 1-800-829-4933.
- Information to Have Ready: Have your Social Security number (SSN) or Employer Identification Number (EIN), tax year(s) in question, the amount you owe, and your proposed monthly payment amount readily available.
- Best Time to Call: Call early in the morning (7 a.m. local time) or late in the afternoon for potentially shorter wait times. Be prepared for hold times, especially during peak tax season.
Sub-heading: By Mail (Form 9465, Installment Agreement Request)
This is a traditional method, suitable if you prefer paper forms or if you're unable to use the online or phone options.
- Form to Use: Complete and submit Form 9465, Installment Agreement Request. You can download this form from the IRS website (IRS.gov).
- Completing the Form:
- Personal Information: Fill in your name, address, SSN/EIN, and contact information.
- Tax Information: Indicate the tax year(s) and the total amount you owe.
- Proposed Payment: Clearly state the monthly payment amount you can afford and your preferred payment due date.
- Financial Information (if required): For some cases, especially if you owe a higher amount or don't qualify for a streamlined agreement, you may also need to attach Form 433-F (Collection Information Statement) for individuals, or Form 433-B (Collection Information Statement for Businesses).
- Where to Mail: The mailing address varies depending on your location. Refer to the instructions for Form 9465 to find the correct IRS Service Center address.
- Processing Time: It can take several weeks for the IRS to process mailed requests and send you a notification of approval or denial.
Sub-heading: In Person (Taxpayer Assistance Center - TAC)
For those who prefer face-to-face interaction or need personalized assistance, a Taxpayer Assistance Center (TAC) can be a good choice.
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- Find a TAC: Use the IRS website's search tool to find the nearest TAC location.
- Make an Appointment: Appointments are highly recommended as walk-in services are limited.
- Bring Documentation: Bring all relevant tax notices, financial information, and identification.
Step 3: What Happens After You Apply?
Once you've submitted your payment plan request, the IRS will review it. The outcome and subsequent steps will depend on the method you used and your eligibility.
Sub-heading: Approval and Next Steps
- Online Application: You'll typically receive an immediate on-screen notification of approval. You'll then be directed to set up your payment method.
- Phone or Mail Application: The IRS will send you a notice (often CP521 or CP523) confirming the terms of your agreement, including your monthly payment amount, due date, and any applicable setup fees.
- Making Payments:
- Direct Debit (DDIA): This is the most convenient and often cheapest option (lower setup fee). Your payments will be automatically withdrawn from your bank account on your chosen due date.
- IRS Direct Pay: You can schedule payments directly from your checking or savings account for free.
- Debit/Credit Card: Third-party processors charge a fee for this service.
- Electronic Federal Tax Payment System (EFTPS): This is a free service, but requires enrollment.
- Check or Money Order: Mail your payments to the address specified in your approval notice.
Sub-heading: What if Your Request is Denied or You Need to Revise?
- If Denied: The IRS will send you a notice explaining why your request was denied and your appeal rights. Common reasons for denial include not being current on all tax filings or owing more than the limits for streamlined agreements. Don't give up! You may still have other options, such as an Offer in Compromise, or you might need to provide more financial information.
- Revising an Existing Agreement: You can often revise an existing installment agreement online through the Online Payment Agreement tool (e.g., change monthly payment amount, due date, or bank information for direct debit). If you're unable to do so online, call the IRS at the numbers provided earlier.
Step 4: Maintaining Your Payment Plan
Getting a payment plan approved is a great first step, but it's critical to adhere to its terms to avoid defaulting and facing further collection actions.
Sub-heading: Key Responsibilities
- Make Timely Payments: Ensure your monthly payments are made on time as agreed. Setting up direct debit is highly recommended to avoid missing payments.
- File All Future Tax Returns On Time: You must remain compliant with all future tax filing requirements.
- Pay All Future Taxes Due On Time: When you file future returns, ensure you pay any new tax liabilities in full by the due date.
Sub-heading: Consequences of Defaulting
If you fail to meet the terms of your payment agreement, the IRS may:
Tip: Patience makes reading smoother.
- Default your agreement.
- Levy your bank accounts or wages.
- File a Notice of Federal Tax Lien.
Related FAQ Questions
Here are 10 common "How to" questions related to IRS payment plans, with quick answers:
How to check my IRS payment plan status?
You can check the status of your IRS payment plan by logging into your IRS Online Account. This account provides details on your payment history, upcoming payments, and the terms of your agreement.
How to change my IRS payment plan amount?
You can often change your monthly payment amount online through the IRS Online Payment Agreement tool. If you can't do it online, you can call the IRS directly at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).
How to change my IRS payment plan due date?
Similar to changing the amount, you can usually adjust your monthly payment due date using the IRS Online Payment Agreement tool or by calling the IRS directly.
How to set up direct debit for my IRS payment plan?
When applying for an installment agreement online or by mail (Form 9465), you'll be prompted to provide your bank account information to set up direct debit. If you have an existing agreement, you can convert it to a Direct Debit Installment Agreement (DDIA) through your IRS Online Account.
How to get an IRS payment plan if I owe more than $50,000?
If you owe more than $50,000 (for individuals) or $25,000 (for businesses), you may still qualify for a long-term payment plan, but you will likely need to provide detailed financial information (Form 433-F for individuals, Form 433-B for businesses) and potentially work directly with an IRS representative. An Offer in Compromise might also be an option.
Tip: Each paragraph has one main idea — find it.
How to get an IRS payment plan if I haven't filed all my returns?
To qualify for most IRS payment plans, you must be current on all your tax filings. You will need to file all outstanding returns before the IRS will approve a payment plan.
How to appeal an IRS payment plan denial?
If your IRS payment plan request is denied, the IRS will send you a notice explaining the reason for the denial and your appeal rights. You typically have 30 days to appeal the decision by following the instructions in the notice.
How to get penalty relief from the IRS?
The IRS may offer penalty relief in certain situations, such as first-time abatement (if you have a good tax history), reasonable cause (due to unavoidable circumstances), or statutory exception. You generally need to request penalty relief separately after your tax liability is established or during the payment plan negotiation.
How to contact the IRS about an Offer in Compromise (OIC)?
You can initiate an OIC by using the IRS Offer in Compromise Pre-Qualifier Tool online, or by preparing and submitting Form 656, Offer in Compromise, along with supporting financial documentation. You can also contact the IRS at 1-800-829-1040 to discuss OIC options.
How to find an IRS Taxpayer Assistance Center (TAC) near me?
You can find the nearest IRS Taxpayer Assistance Center (TAC) by visiting the "Contact Your Local IRS Office" section on the IRS.gov website and using their search tool to locate TACs by zip code or state. Remember to make an appointment before visiting.
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