According to the IRS, if "Bob" can prove that he would face serious financial hardship by paying his taxes, or is unable to pay them right away, he can apply for a monthly installment plan. The IRS also says in form 9465 that under certain circumstances, the IRS may lower the taxes it charged him.
Before Bob fills out the form, however, the IRS warns him that it may be better to take out a loan or use available credit on a credit card because there is a fee required to submit the form. There is a $105 fee ($52 if payment is made by electronic funds withdrawal) or a reduced $43 fee if Bob's income is below a certain level. The IRS also cautions him not to use the form if he can make the payment in 120 days or if he wants an on-line payment agreement.
If Bob can make the payments in 120 days, he needs to call 1-800-829-1040 and request to make the full payment in 120 days. This way he can avoid the application fee of form 9465. He should also call this number if he is in a bankruptcy, or he has filed--and the IRS has accepted--an offer-in-compromise.
If Bob wants to apply for a payment plan on line, he needs to go to the IRS website (link below), use the pull-down menu under "I need to..." and select "Set Up a Payment Plan". This will liberate him from filing form 9465.
The Installment Agreement As Laid Out In Form 9465
If Bob completes form 9465 and files it, the IRS will probably notify him of the results in 30 days--unless the request is for tax due on a return filed after March 31--then it might take longer. In the event that the IRS approves the request, Bob will receive a notice detailing the terms of the agreement and requesting the fee due for the submission of his request. The IRS will let Bob know if he qualifies for the reduced fee, but he can request the reduced fee using form 13844 if the IRS does not say he qualifies.
The IRS will charge Bob interest, and may charge him a late payment penalty on any tax not paid by its due date, even if his request to pay in installments is granted. Interest and any applicable payments will be charged until the balance is paid in full. In order to limit Interest and penalty charges, the IRS recommends that Bob files his return on time and pays as much of the tax as possible with his return (or notice).
The IRS says that by approving Bob's request they agree to let him pay the tax he owes in monthly installments, instead of immediately paying the amount in full. All payments received will be applied to his account in the best interests of the United States. In return, Bob agrees to make his monthly payments on time, and to meet all future tax liabilities.This means that he must have enough withholdings or estimated tax payments so that future tax liabilities are paid in full when he timely files his returns. Bob's request will be denied if he has not filed all his tax returns. Furthermore, any future refunds will be deducted from the amount Bob owes, and that if a refund is applied to his balance, he is still required to make his monthly installation payments
Guaranteed Installment Agreement
Bob's submission is guaranteed to be accepted if all the following conditions are met:
* He owes less than $10,000.
* During the past 5 years Bob (and his spouse if filing a joint return) have timely filed all income tax returns, paid any income tax due, and have not entered into an installment agreement for payment of income tax.
* The IRS determines that he cannot pay the tax he owes in full at the time due, and he provided the information needed to make that determination.
* Bob agrees to pay the full amount he owes in three years, and to comply with the tax laws while the agreement is in effect.
The Payments
Bob can make his payments by cash, money order, credit card, or one of the other payments shown below. The application fee is dependent on what type of payments Bob wants to make. The application fee submitted with his request is a one-time event:
After the IRS receives each payment, they will sent Bob a notice confirming it, and showing the remaining debt. If Bob chooses to have the funds automatically withdrawn from his checking account, his bank statement will serve as his notice. He will not receive an additional one from the IRS. The IRS will also send Bob an annual statement showing the amount he owed at the beginning of the year, the amount he owed at the end of the year, and a record of all the payments made during the year.
A Word of Caution
If Bob doesn't make his payments on time, or doesn't pay what he owes on a return filed later, he will be in default on his agreement. The IRS may then proceed to take enforcement actions such as the filing of a Notice of Federal Tax Lien, or an IRS Levy Action to collect the entire amount he owes.
If you don't want to get your forms directly through the IRS, click link and use the search feature: http://www.irstaxhelp.com/tax-forms.html or call: 888-231-1100 (toll free)
INITIAL FREE IRS Tax Help anywhere in the U.S.A.
We can help you solve a wide range of issues.
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* Offer in Compromise to settle a tax debt
* CPA Services (through affiliate)
* California Property Tax Relief
* Tax Services & Tax Preparation
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* Payroll Services at up to 1/2 off ADP and Paychex
* Bookkeeping & full Accounting Services
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Author Resource:-
If you don't want to get your forms directly through the IRS, click link and use the search feature: http://www.irstaxhelp.com/tax-forms.html or call: 888-231-1100 (toll free)
INITIAL FREE IRS Tax Help anywhere in the U.S.A.
We can help you solve a wide range of issues.
Quickly - confidentially - reasonably priced.
* Offer in Compromise to settle a tax debt
* CPA Services (through affiliate)
* California Property Tax Relief
* Tax Services & Tax Preparation
* Relief from back IRS State and local taxes
* Payroll Services at up to 1/2 off ADP and Paychex
* Bookkeeping & full Accounting Services
* Incorporation Services
* QuickBooks Training and Setup
Try Us! Since it's initially FREE, you can't go wrong.
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