Back taxes can drive you into significant debt due to penalties and accumulating interests. You may also lose your assets due to liens imposed by the IRS. Setting up a payment plan is the best way to avoid such consequences while organizing your finances.
The IRS allows taxpayers to pay their debt using various installment plans. It also offers tax forgiveness programs to reduce the burden of delinquent taxes.
Here, we discuss ways to set up a payment plan with the IRS. We will also cover some debt relief programs you can consider.
One way to set up a payment plan with the IRS is by applying online. Log in to your e-filing portal using your account ID. After that, complete Form 9465 (installment agreement request) and submit it.
This document will require you to provide details needed during payment plan processing. Such may include the amount you owe, your employer, and your bank information. It also provides a section inquiring about the amount you can afford and the date you want to remit the installments.
Contact the IRS by Phone
Another way to set up an installment plan is by calling the IRS. Use the number 800-829-1040 to apply for debt relief for personal taxes. On the other hand, if you need an installment plan for your business, use 800-829-4933.
The IRS may provide phone numbers on the bill or notice sent by mail. Contact this number if you do not want to fill out the payment plan form. The agent will then request some information and use it to request a payment plan on your behalf.
Apply by Mail
The method used to set up a payment plan by mail can vary. If you request a tax relief program while submitting your returns, attach Form 9465 to the front. However, send the document to the nearest IRS office if you mailed your tax return forms or filed them online.
Contact a Tax Resolution Expert
Working with a tax resolution expert is the best way to set up an installment plan with the IRS. Professionals can review your financial documents and help you file back taxes. They will also consider your income and expenses before recommending a suitable tax relief program.
When setting up a tax forgiveness plan with an expert's help, they will identify all the documents needed for the process. Afterward, they will guide you in filling out various forms or do it for you. The expert will then verify your application before submitting it to the IRS.
IRS Tax Payment Plans to Consider
The IRS has several IRS fresh start programs to help you deal with back taxes. Such include:
- Short-term installment plan
- Long-term installment program
- An Offer in Compromise
- IRS Hardship program
The short-term installment plan is available if you owe a total amount of less than $100,000. When applying for this program, you won't pay a setup fee. Still, you will have to clear the total debt in 180 days or less.
If you owe the IRS less than $50k, you may qualify for a long-term installment plan. The setup fee is $31 when applying online and $107 when using other methods.
An IRS offer in compromise lets you pay less than what you owe. However, you must remit 20% of the debt when sending your application. If the IRS approves your request, you may clear the balance in installments.
An IRS hardship program stops all debt collection measures. Such may include imposing tax liens and freezing bank accounts. Still, the interest and penalties on the owed amount will continue accruing until you can pay.