Do you currently have an IRS payment plan and your financial situation has changed, making it difficult to keep up with your current payments, or perhaps you're in a better financial position and want to pay off your debt faster? You're not alone, and the IRS understands that life happens! Modifying an IRS payment plan, also known as an Installment Agreement, is a common and often necessary process. This guide will walk you through the steps to successfully modify your existing agreement.
Understanding Your Current IRS Payment Plan
Before you embark on the journey of modification, it's crucial to have a clear understanding of your current IRS payment plan. This includes:
- The type of agreement you have: Is it a long-term installment agreement, a short-term payment plan, or a partial payment installment agreement (PPIA)?
- Your current monthly payment amount and due date.
- The total amount you owe, including any accrued penalties and interest.
- The remaining duration of your agreement.
You can usually find this information by reviewing your original agreement documents or logging into your IRS Online Account.
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| How To Modify Irs Payment Plan |
Step 1: Assess Your Current Financial Situation and the Need for Modification
This is where you come in! Take a deep breath and realistically evaluate why you need to modify your payment plan. Are you experiencing:
- A significant decrease in income? (e.g., job loss, reduced hours, business downturn)
- Unexpected expenses? (e.g., medical emergencies, natural disaster)
- A change in marital status?
- New tax debt added to an existing agreement?
- An improvement in your financial situation and you wish to pay off your debt faster to reduce interest and penalties?
Be prepared to provide updated financial information to the IRS, such as income, expenses, and any changes in your financial circumstances. This information will be crucial for the IRS to assess your ability to make payments under a new arrangement.
Sub-heading: Documenting Your Financial Changes
Gathering necessary documentation before contacting the IRS will significantly streamline the process. This might include:
- Pay stubs or income statements (showing current income).
- Bank statements (to reflect current balances and regular expenses).
- Bills for significant expenses (e.g., medical bills, new rent agreement).
- A detailed list of your monthly income and expenses. The IRS may ask for a Collection Information Statement (Form 433-F for individuals, Form 433-B for businesses), so familiarize yourself with these.
Step 2: Choose Your Method of Contacting the IRS
The IRS offers several avenues for modifying your payment plan. The best method for you will depend on the complexity of your situation and the type of changes you wish to make.
Sub-heading: Option 2.1: Online Payment Agreement Tool (Recommended for Simple Changes)
For many taxpayers, the IRS Online Payment Agreement (OPA) tool is the quickest and most convenient way to make changes. You can use this tool to:
QuickTip: Focus on one line if it feels important.
- Change your monthly payment amount.
- Change your monthly payment due date.
- Convert an existing agreement to a Direct Debit agreement.
- Change the bank routing and account number on a Direct Debit agreement.
- Reinstate a
defaulted agreement (if eligible).
How to Use the Online Payment Agreement Tool:
- Visit the IRS website and navigate to the "Online Payment Agreement Application" section.
- Log in to your IRS Online Account. If you don't have one, you'll need to create one (which usually requires photo identification for verification).
- Select the "Review or Revise an Existing Plan" option.
- Follow the on-screen prompts to update your payment terms.
- Review and submit your request.
If approved, your new terms generally take effect within 30 days.
Sub-heading: Option 2.2: By Phone (Best for Complex Cases or Specific Inquiries)
If your situation is more complex, you owe more than the OPA tool limits ($50,000 for individuals, $25,000 for businesses in combined tax, penalties, and interest), or you prefer speaking directly with an IRS representative, calling them is a viable option.
IRS Phone Numbers:
- For individuals: 1-800-829-1040
- For businesses: 1-800-829-4933
- For existing installment agreements: You might be directed to the general individual or business line, or a specific department depending on your notice.
What to Have Ready Before Calling:
- Your Social Security Number (or EIN for businesses).
- Your most recent tax return.
- Details of your current installment plan.
- Your income and expense details
(especially if requesting a lower payment). - Be prepared for potentially long wait times, especially during peak tax season. Calling early in the morning or mid-week can sometimes help reduce wait times.
Sub-heading: Option 2.3: By Mail (For Formal Requests or When Ineligible for Online/Phone)
For formal requests, or if you are ineligible to make changes online or over the phone (e.g., you owe a very large amount or your situation requires extensive documentation), you can submit your request by mail.
How to Modify by Mail:
QuickTip: A slow read reveals hidden insights.
- Download and complete Form 9465, Installment Agreement Request. You can find this on the IRS website.
- Attach supporting documents if applicable (e.g., proof of financial hardship if requesting a lower payment).
- Clearly state the changes you wish to make to your installment agreement. This might include adjusting the monthly payment amount, extending the agreement's duration, or requesting a temporary suspension of payments due to financial hardship
(though interest and penalties will continue to accrue). - Mail the form to the correct IRS address as listed in the form instructions.
Keep a copy of everything you send for your records.
Sub-heading: Option 2.4: Work with a Tax Professional (Highly Recommended for Complex Situations)
If you are overwhelmed, your tax debt is substantial, you're seeking a significant reduction in payments, or you're exploring options like an Offer in Compromise (OIC), working with a qualified tax professional (like an Enrolled Agent, CPA, or tax attorney) is highly advisable. They can:
- Help you navigate the complex IRS procedures.
- Advise you on the best course of action based on your specific financial situation.
- Negotiate directly with the IRS on your behalf.
- Prepare and submit all necessary forms and documentation accurately.
- Explore other tax relief options that might be more beneficial, such as an Offer in Compromise or "Currently Not Collectible" status.
Step 3: Propose Your Desired Changes and Provide Information
Once you've chosen your method of contact, you'll need to clearly articulate the changes you're requesting and provide the necessary financial information.
Sub-heading: Lowering Your Monthly Payment
If you're requesting a lower monthly payment due to financial hardship, the IRS will need to understand your current ability to pay. This often involves providing a detailed breakdown of your income and expenses. The IRS will evaluate your "reasonable collection potential" to determine an affordable payment amount.
Sub-heading: Changing Your Due Date
This is usually a straightforward request if it's within IRS guidelines. Ensure the new due date aligns better with your income cycle.
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Sub-heading: Converting to Direct Debit
Converting to Direct Debit can sometimes reduce your user fee for the installment agreement and helps ensure payments are made on time, reducing the risk of default.
Sub-heading: Reinstating a Defaulted Agreement
If your payment plan has defaulted (e.g., due to missed payments or unfiled tax returns), you may be able to reinstate it. This often involves a reinstatement fee and demonstrating your ability to comply with the terms going forward.
QuickTip: Stop and think when you learn something new.
Step 4: Wait for IRS Review and Response
After submitting your request, the IRS will review your information. This process can take some time, so patience is key. The timeframe can vary depending on the method of contact and the complexity of your request.
During this review period, it's generally advisable to continue making your previously agreed-upon payments if at all possible. Stopping payments before your modification is approved can lead to your plan defaulting and additional penalties or enforcement actions.
Step 5: Receive and Adhere to the New Terms
You will receive a notice from the IRS outlining their decision regarding your amendment request. This notice will either:
- Approve your request: The notice will detail the new terms of your agreement.
- Modify your request: The IRS may propose different terms than what you initially requested.
- Deny your request: The notice will explain the reason for the denial and your appeal rights.
If your amendment request is approved, it is absolutely crucial to adhere to the new terms promptly. Continue making payments as required and ensure you remain compliant with all tax obligations (e.g., filing future tax returns on time).
Sub-heading: What if Your Request is Denied?
If your modification request is denied, don't panic! You generally have the right to appeal the decision. The IRS notice will typically provide instructions on how to appeal. This is another situation where a tax professional can be immensely helpful in understanding the reasons for denial and formulating a strong appeal.
Regularly Review Your Agreement
Periodically review your installment agreement to ensure it continues to meet your financial needs.
10 Related FAQ Questions
How to check my current IRS payment plan details?
You can check your current IRS payment plan details by logging into your IRS Online Account on the IRS website. This account allows you to view your payment history, payment plan details, and the amount you owe.
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How to change my monthly payment amount on an IRS installment agreement?
You can change your monthly payment amount using the IRS Online Payment Agreement tool if you qualify, or by calling the IRS directly at 1-800-829-1040 for individuals (or 1-800-829-4933 for businesses). Be prepared to provide updated financial information.
How to change my payment due date for my IRS installment agreement?
The IRS Online Payment Agreement tool is the easiest way to change your monthly payment due date. Alternatively, you can call the IRS at the numbers provided above.
How to convert my existing IRS payment plan to a Direct Debit Installment Agreement?
You can convert your existing payment plan to a Direct Debit Installment Agreement through the IRS Online Payment Agreement tool. This may also reduce your setup fee for the agreement.
How to reinstate a defaulted IRS payment plan?
If your IRS payment plan has defaulted, you may be able to reinstate it using the IRS Online Payment Agreement tool or by contacting the IRS by phone. A reinstatement fee may apply.
How to apply for a temporary suspension of IRS payments due to hardship?
To request a temporary suspension of payments (often referred to as "Currently Not Collectible" status), you'll need to contact the IRS directly by phone or mail and provide detailed financial information demonstrating severe financial hardship. Interest and penalties will continue to accrue.
How to appeal an IRS decision to deny my payment plan modification?
If the IRS denies your request to modify your payment plan, the denial letter will typically provide instructions on how to appeal the decision. You generally have 30 days to file an appeal.
How to find out if I qualify for an Offer in Compromise instead of modifying my payment plan?
You can use the IRS Offer in Compromise Pre-Qualifier Tool on the IRS website to determine if you might be eligible to settle your tax debt for less than the full amount owed. You can also consult a tax professional.
How to get help from a tax professional to modify my IRS payment plan?
You can find qualified tax professionals, such as Enrolled Agents, Certified Public Accountants (CPAs), or tax attorneys, by searching online, asking for referrals, or checking professional directories. They can assist with complex modifications and negotiations.
How to ensure my modified IRS payment plan remains in good standing?
To ensure your modified payment plan remains in good standing, always make your payments on time according to the new terms, and file all future tax returns on time, even if you can't pay the full amount due.
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