If you owe taxes to the Internal Revenue Service (IRS), you need to pay the money in one lump sum or make payment arrangements using one of the approved methods. If you don’t make the payment arrangements, the IRS can take steps to collect the money, which will affect your assets.
The IRS offers an installment plan that can be spread out over months to pay back taxes. The amount of the monthly payment and the length of time depends on your income and the amount of debt owed. Before you can request an installment plan, you must have all of your prior-year tax returns filed with the IRS. You must also be current on any estimated tax payments for the current tax year if any are due.
Request the installment plan by completing the Online Payment Agreement at the IRS website if you owe $50,000 or less (including penalties and interest) or by calling the number on the payment request letter you received from the IRS.
If you owe less than $25,000, you can complete Form 9465 Installment Agreement; or, if you owe more than $25,000, use Form 9465-FS and send the form to the address on your payment request letter from the IRS.
In order to complete the Online Installment Agreement, you need your tax identification number or Social Security number, date of birth, and the identification number on the most recent payment request letter from the IRS (listed under “Caller ID number"). You also need your adjusted gross income from the tax year in which you owe tax money (or a PIN if you filed your taxes online), employer address, bank address and your tax return to verify information. Before filing the agreement, decide how much money you can afford to pay each month for the entire period of the installment plan.
If you want to have the IRS deduct a monthly payment from your payroll check, you must complete Form 2159 and mail it to the address that is on the payment request letter from the IRS. This allows the IRS to collect funds from your payroll check each payday until the back taxes, penalties and interest are paid.
Time to Pay
You can ask for additional time to pay taxes owed, which can give you more time to pay, instead of using an installment plan. However, this only gives you additional time and is not a monthly payment plan like the installment plan. You can request the additional time to pay by filling out the Online Payment Agreement application online at the IRS website or you can call 800-829-1040 and complete the application process. Do not use the online form if you plan to pay the balance owed in full in 120 days or less.
Failure to Pay
If you miss a payment while participating in the installment plan, you'll void the agreement with the IRS. This means that the government can place a lien on your assets and bank accounts. Before the IRS places a lien on your assets, you will receive a certified letter in the mail telling you what actions are being taken, and why.
- How Do I Request a Wage & Income Transcript?
- How Can I Get a Transcript of a Federal Tax Lien?
- Getting a Discounted Payoff on Credit Cards
- The Proper Way to Address a Letter to the IRS
- How to Stop an Online Payment from Your Bank Account
- What if I Gave the Wrong Account Number on My Tax Refund?
- What If I Owe Taxes With My Return But Do Not Have the Money to Pay Them?
- How Long Do You Have to File if the Government Owes You Taxes?