IRS Agreement: What It Is and Why You Need One
If you`re a taxpayer who owes money to the IRS, you may be able to set up an IRS payment agreement to manage your tax debt. This agreement outlines the terms of a payment plan that allows you to make installment payments to the IRS over time. It can be an excellent solution for taxpayers who can`t pay their tax debt in full by the deadline.
What is an IRS Payment Agreement?
An IRS payment agreement, also known as an IRS installment agreement or IRS payment plan, is an option for taxpayers who can`t pay their full tax bill at once. Under this agreement, the taxpayer agrees to pay the IRS a set amount each month until the debt is paid off.
There are different types of payment agreements available, including:
– Guaranteed Installment Agreement: You owe less than $10,000, and you can pay off the balance within three years.
– Streamlined Installment Agreement: You owe between $10,001 and $50,000, and you can pay off the balance within six years.
– Partial Payment Installment Agreement: You can`t pay off the full balance within the time frame of the other options. Instead, you make monthly payments based on what you can afford until the statute of limitations for the debt runs out.
– Non-Streamlined Installment Agreement: You owe more than $50,000, or you can`t pay off the balance within the time frame of the other options.
Why Do You Need an IRS Payment Agreement?
There are several reasons why you may need an IRS payment agreement. If you owe money to the IRS, and you can`t pay it off, the IRS may take action to collect the debt. This could include wage garnishment, levies on your bank account, or even taking legal action against you.
An IRS payment agreement can help you avoid these consequences. Instead of facing aggressive collection tactics, you can make affordable monthly payments until your debt is paid off.
Additionally, an IRS payment agreement can help protect your credit score. If you fail to pay your tax debt, the IRS may report your unpaid balance to the credit bureaus, which could significantly hurt your credit score.
How to Request an IRS Payment Agreement
To request an IRS payment agreement, you`ll need to fill out Form 9465, Installment Agreement Request. You`ll need to provide information about your tax debt, income, and expenses.
If you owe less than $50,000, you can request an installment agreement online through the IRS website. If you owe more than $50,000, you`ll need to contact the IRS directly to set up your payment agreement.
Once your agreement is approved, you`ll need to make your monthly payments on time and in full. If you miss payments, the IRS may revoke your agreement, and you`ll be subject to collection actions.
If you owe money to the IRS and can`t pay the balance in full, an IRS payment agreement can be an excellent solution. It can help you avoid aggressive collection tactics, protect your credit score, and give you a clear path to paying off your tax debt. If you`re interested in setting up an IRS payment agreement, contact the IRS and get started today.