IRS Payment Plans for 50K or Less

When a tax debtor is incapable of meeting his or her tax obligations, alternatives to payment of the full tax liability outright and immediately must be considered. Entering into an installment agreement with the Internal Revenue Service (IRS) is just one of a number of viable options for those that cannot meet their tax obligations. Yet installment agreements often prove to be the best fit for most tax debtors, as they provide the ability for a tax debtor to meet his or her obligations over a more manageable period of time.

Despite the convenience of the installment agreement, the tax debtor’s viability for such an alternative payment arrangement is based in part upon the amount owed. For tax debtors that owe $50,000 or less, the installment agreement is a particularly attractive solution. Under the Fresh Start program, it is easier for taxpayers that owe $50,000 or less to qualify for an installment agreement. Furthermore, where a tax debtor owes $50,000 or less, he or she can submit an application for an installment agreement without submitting the financial information that is normally required as per Form 433-F. Internal Revenue Service, Internal Revenue Manual, available at https://www.irs.gov/irm/part5/irm_05-014-002r.

The situation improves further if the tax debtor owes $10,000 or less because in such cases the IRS is obligated to accept the tax debtor’s request for an installment agreement provided the tax debtor meets the requirements. These requirements include the following:

• The taxpayer has filed all income tax returns in a timely fashion and has paid all income taxes and has not used an installment agreement for the past 5 years; and
• The installment agreement must provide for payment in full of the tax obligations within three years, and all filing requirements and payment of future taxes must be complied with while the installment agreement is in effect.

The form to be used by the tax debtor to request an installment agreement depends upon the amount owed by the tax debtor as well. Tax debtors owing $50,000 or less but more than $25,000 can use Form 433-F or Form 9465-FS, but do not have to provide all financial information typically required by that form. Tax debtors owing $25,000 or less but more than $10,000 can use Form 9465. Tax debtors owing $10,000 or less should also use Form 9465.

For more information, contact an experienced tax attorney who can assist you with the nuances of installment agreement requests.

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Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.

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