IRS Online Payment Agreement Application for Back Taxes

This has been posted elsewhere on the site, but it it’s worth re-posting now.  If you owe back taxes to the IRS, you may be able to set up your own installment agreement.  

• If you know you need to take action, read my article “IF” you should hire IRS back tax help.  (You should not automatically.) Titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” before you do anything else.

As usual, If you like the tone of this writing, I would like to refer you to someone who meets irs back tax help criteria.  Please contact irs back tax help.  Before you email me, please click on and read “About irs back tax help.”

If you want to handle your IRS back taxes on your own, start here to see if you qualify:  Online Payment Agreement Application.

There are some pre-requisites:

1.  You owe less than $50k in 1040 delinquent taxes.

2.  You aren’t missing any filings.

Once you’re in the installment agreement, and you’ve paid your back taxes for more than 6 months, you can pursue a tax lien removal.  

IRS Helps Taxpayers who Owe Back Taxes?

Yes!  New IRS Fresh Start Initiative Helps Taxpayers Who have Past Due Taxes

All irs back tax help writing is in blue.  Below is a link to the IRS Fresh Start Initiative that helps people who are dealing with overdue IRS tax.   effective 3/12/2012.  If you have questions about this review, please reference:  bp108.

• If you know you need to take action, read my article “IF” you should hire IRS back tax help.  (You should not automatically.) Titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” before you do anything else.

As usual, If you like the tone of this writing, I would like to refer you to someone who meets irs back tax help criteria.  Please contact irs back tax help.  Before you email me, please click on and read “About irs back tax help.”

IRS Fresh Start Initiative 2012

First, last year’s review:  2011 IRS Fresh Start Initiative.

The irs.gov link and full original text:  2012 IRS Fresh Start Initiative.

New changes in IRS Collection policy for 2012 are reviewed below.

1. “Penalty relief Part of the initiative relieves some unemployed taxpayers from failure-to-pay penalties. Penalties are one of the biggest factors a financially distressed taxpayer faces on a tax bill. The Fresh Start Penalty Relief Initiative gives eligible taxpayers a six-month extension to fully pay 2011 taxes. Interest still applies on the 2011 taxes from April 17, 2012 until the tax is paid, but you won’t face failure-to-pay penalties if you pay your tax, interest and any other penalties in full by Oct. 15, 2012.”

• The first question that comes up is do you have to be unemployed now, or at the time the tax liability was accrued?  Still searching for the answer.
• This is great news and dovetails exactly with when we have always recommended you seek to hire IRS back tax help.  (When you owe more than $50,000)
• Before you set up an installment agreement with the IRS through the On-line Payment Agreement (OPA), I really recommend you take the time to read about the “in’s and out’s” of IRS Installment Agreements.

2. Installment agreements.  “The new threshold for requesting an installment agreement has been raised from $25,000 to $50,000. This option requires limited financial information, meaning far less burden to the taxpayer. The maximum term for streamlined installment agreements has been raised to six years from the current five-year maximum.”

3. Offer in Compromise:  No official changes to Offer in Compromise (IRS Form 656) for 2012.  (Yet.)

The IRS “What Ifs” for taxpayers in an Economic Downturn

Click “About irs back tax help” to learn about us or read irs back tax help Testimonials to see how we treat people.

If you would like irs back tax help to be your first or second opinion, I can be reached at irsbacktaxhelp@gmail.com.  I do not pressure people in an already stressful situation.

Regards,

irs back tax help

If I Owe Back Taxes, Can I Get an IRS Installment Agreement?

Do I need help to set up an IRS Installment Agreement, aka IRS Pay Plan?  

You can set up your own IRS Installment Agreement, but be careful! 

This is a review of IRS Installment Agreements, aka IRS Payment Plans.  What types are available, how you can get them, and things to think about prior to committing to an IRS Installment Agreement.  If you have questions about this review, please reference:  BP84.  irs back tax help comments are in blue, irs.gov original text is in black.  

• If you know you need to take action, read my article “IF” you should hire IRS back tax help.  (You should not automatically.) Titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” before you do anything else.

As usual, If you like the tone of this writing, I would like to compete for your business.  I can be reached at irsbacktaxhelp@gmail.com.  Before you email me, please click on and read “About irs back tax help.”

The goal of the IRS for an Installment Agreement: 

• Pay the IRS back taxes owed as fast as possible in full.
• Leave no “wiggle room” for unplanned expenses in your budget.
• Collect all penalty and interest.

The goal of the taxpayer for an Installment Agreement: 

• Pay the IRS back taxes owed in a way that makes sense.
• Make voluntary payments on top of the formal payment. 
• To use those voluntary payments to eliminate the penalties that can be eliminated.  (This also mitigates other IRS Penalty & Interest growth)
• To win an abatement of penalty.  (Remove IRS penalty that has already accrued on past due taxes.)

If you have an IRS Installment Agreement that does not make sense:

When it comes to installment agreements, literally, the majority of our work is re-work of installment agreements that people set up on their own and defaulted, or worse, did not default the IRS pay plan, but defaulted a mortgage, or cancelled insurance, or cashed their 401k, etc…  Do not agree to an installment agreement that does not pass the common sense test.  Substituting different problems for your IRS tax problem is not a solution.   Examples:

• From the outset you know you cannot afford the payments.
• If you know that you will eventually not be able to afford it, whether it is 6 months down the road or two years.  Draw the line now. 
• Agreeing to plan causes you to somehow damages your future

If any of these examples of bad IRS problems, there are other alternatives.  See below. 

IRS Installment Agreements for overdue tax (full text) from irs.gov.

“You can make monthly payments through an installment agreement if you’re not financially able to pay your tax debt immediately. However, you will reduce or eliminate the amount of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full.”  

If you allow the IRS to dictate Installment Agreement terms, here are some general rules of thumb for IRS penalty and interest growth rate:

• 1 year over due tax:  ~20-25% growth rate.  
• 2 years over due tax:  ~40% growth rate.
• 3+ years over due tax:  double the original liability.

“Before you apply:

• File all required tax returns;” File as soon as possible no matter what.  File even if you can’t pay anything.  The IRS Failure to File penalty grows to 22% over the course of the first year.  
• “Consider other sources (loan or credit card) to pay your tax debt in full to save money;” Only pursue this if you can pay the tax debt in full.  If you do this and partially pay your past due IRS tax, you’ll end having to pay the loan and deal with ongoing IRS collection efforts for the rest further damaging your cash flow.  
• “Determine the largest monthly payment you can make ($25 minimum); and” The longest regular IRS Installment Agreement can go is 60 months.  If you need more time, it’s time to consider an IRS Partial Payment Installment Agreement, or an IRS Offer in Compromise (IRS Form 656).  
• “Know that your future refunds will be applied to your tax debt until it is paid in full.”  They may take state tax refunds as well. 

There are three different versions of installment agreements that can be had

1. Regular Installment Agreement:  Monthly installment payments that are the same amount every month up to 5 years long.
2. Seasonal Installment Agreement:  If your business or income is seasonal, you can arrange to have your payments reflect your income.  During your off-season payments can stop or decrease, and during your busy season you make regular payments. 
3. Tiered Installment Agreement:  For people trying to recover from a significant drop in revenue or income, but expect to ramp cash flow back up over time.  So in year one, you have one regular payment, in year two, the monthly payment jumps up, year three it goes up again, etc… 

If you would like irs back tax help to be your first or second opinion, I can be reached at irsbacktaxhelp@gmail.com.  Please read “About irs back tax help” first.  

How do I get a business IRS 941 payroll (Trust Fund) Installment Agreement?

All IRS Back Tax Help comments are in blue.  This post is about the In business IRS trust fund installment agreement.    

If you know you need to take action, read my thread about whether or not you should hire someone (You shouldn’t automatically) titled “How do I hire IRS back tax help?”  Here’s the link:

https://irsbacktaxhelp.wordpress.com/2011/10/31/i-owe-the-irs-back-taxes-how-do-i-hire-irs-back-tax-help/

As usual,  If you like the tone of these posts, contact me for consultation.  I can be reached at irsbacktaxhelp@gmail.com.  Before you email me, please click on and read “About IRS  BACK  TAX  HELP”.

http://www.irs.gov/businesses/small/article/0,,id=239096,00.html

These installment agreements generally do not require a financial statement or financial verification as part of the application process.  If you don’t want to submit financial information to the IRS, this is the plan for you.  The problem is you must meet the below criteria.  Most people don’t realize that collection efforts don’t trigger audits.  If you’re worried about scrutiny, don’t.  Revenue Officers are not auditors, and only care about collecting from people who owe the IRS back taxes.  

The criteria to qualify for an In Business Trust Fund-Express IRS Installment Agreement are:

• You owe $25,000 or less at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.  Don’t substitute different problems for this one, if paying down to $25,000 doesn’t make sense, don’t do it.  
• The debt must be full paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier.  Same idea, if you need more time, take it.  Most of my clients took the aggressive payment action and then defaulted.  Be smart up front.  Get what you need.  
• You must enroll in a Direct Debit installment agreement (DDIA) if the amount you owe is between $10,000 and $25,000.  Do this and then get the IRS tax lien removed.  
• You must be compliant with all filing and payment requirements.  Always a baseline requirement.  Do this no matter what.  Eliminates the Failure to Deposit Penalty, which grows to 22% over the first year.  

To Request an In-Business Trust Fund Express Installment Agreement:

• Call the number on your bill or 1-800-829-4933
• Visit your local IRS office
• Complete IRS Form 9465, Installment Agreement Request (PDF), and send it to the address on your bill. If you do not have a bill, send the form to the address on page 2 of Form 9465

References/Related Topics

• Struggling with Paying Your Taxes? Let IRS Help You Get a Fresh Start
• Payment Plans, Installment Agreements

Have there been any new changes to IRS Tax Lien Policies? 2011 Fresh Start Initiative

All IRS Back Tax Help comments are in blue.  This review is a further and more in-depth discussion on changes to the IRS tax lien filing policies including what the new dollar thresholds for filing an IRS tax lien, speeding up the time it takes to get a tax lien removed, and getting an IRS tax lien withdrawal once you’re in a direct debit IRS installment agreement.  

If you know you need to take action, read my thread about whether or not you should hire someone (You should not automatically) titled “Owe IRS back taxes?  When, who, and how do I hire IRS back tax help?”  Here’s the link:

https://irsbacktaxhelp.wordpress.com/2011/10/31/owe-the-irs-back-taxes-how-do-i-hire-irs-back-tax-help/

 As usual,  If you like the tone of these posts, contact me for consultation.  I can be reached at irsbacktaxhelp@gmail.com.  Before you email me, please click on and read “About irs back tax help”.

Here is the link to irs.gov:

IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start; Major Changes Made to Lien Process

#1.  Increase in the IRS tax lien filing threshold

“The Fresh Start changes increase the IRS lien filing threshold from $5,000 to $10,000… The IRS will not retroactively apply the new $10,000 lien filing threshold and automatically withdraw a previously filed lien.”  We have seen no change to the IRS’ actual behavior in this regard.  We continue to see IRS tax lien filings well below these levels for both overdue 941 payroll tax as well as 1040 income tax.  After the date of this announcement, it is enforceable depending on circumstances.  

#2.  Requesting an IRS tax lien withdrawal after the tax lien has been released

“The IRS may now issue a withdrawal of a filed Notice of Federal Tax Lien after the lien has been released. If you wish to have the Notice of Federal Tax Lien withdrawn, you must request the withdrawal in writing. Please use Form 12277, Application for Withdrawal, (PDF). In item 8, Reason for requesting withdrawal, check box d, the best interest provision.”  Please note they say you “must” request the IRS tax lien withdrawal.  You cannot trust they will get this done on their own.  I have encountered more than one person who was astounded to find out the lien was in place years after they settled their IRS back tax debt.  Make sure you keep copies and send the application for tax lien withdrawal certified.  

#3.  Tax Lien withdrawal after entering into a Direct Debit installment agreement

“If you are a qualifying taxpayer and meet the eligibility requirements, you may have your lien withdrawn after entering into a Direct Debit installment agreement. Your request for lien withdrawal must be in writing. Please use Form 12277, Application for Withdrawal (PDF). In item 8, “Reason for requesting withdrawal,” check box b, the “entered into an installment agreement” provision.”  This is the biggest news in our industry in years.  The IRS used to never remove a tax lien unless it was their mistake, we proved the lien was poorly perfected, or paid in full.  This option is available for individuals that owe 1040 income tax, businesses that owe income tax (not over due 941 payroll tax) , and out of business companies with any type of tax.  

In order to qualify you must owe $25,000 or less, have everything paid off in 5 years or less or prior to the statute expiring, all your filings are complete, and you have never defaulted on a direct debit installment agreement previously.  

If you’re already in a regular IRS installment agreement, you are allowed to convert to a direct debit installment agreement as long as you meet all of the conditions above.  Here’s the IRS phone numbers you’ll need:  

Individuals (Wage & Salary Earners)	1-800-829-0922
Individuals (Self-Employed)	1-800-829-8374
Businesses	1-800-829-0115

As I’ve mentioned in other posts, if you owe $50,000 or more, or the IRS’ actions are not making sense, get some professional help.  Contact me and I will give you some guidance or encourage you to hire me depending on what will help you the most.  

How do / can I remove an IRS tax lien if I owe the IRS back taxes?

All IRS Back Tax Help comments are in blue.  This post is about changes to the IRS tax lien filing policies, how it’s easier for small business to get an IRS installment agreement, and how to get a tax lien removed or withdrawn.  

If you need to take action, read my thread about whether or not you should hire someone (You shouldn’t automatically) titled “How do I hire IRS back tax help?”  Here’s the link:

https://irsbacktaxhelp.wordpress.com/2011/10/31/i-owe-the-irs-back-taxes-how-do-i-hire-irs-back-tax-help/

As usual,  If you like the tone of these posts, contact me for consultation.  I can be reached at irsbacktaxhelp@gmail.com.  Before you email me, please click on and read “About IRS BACK TAX HELP”.

Here’s the original irs.gov link with the full text:  http://www.irs.gov/businesses/small/article/0,,id=239094,00.html

On February 24, 2011, the Internal Revenue Service Commissioner announced an initiative to help people get a fresh start with their tax liabilities. The changes include:

• Adjustments to IRS Lien Policies
  • Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens  This is a claim that we have not seen change at the ground level.  We are still seeing low dollar tax liens being filed for back taxes well below the IRS stated threshold.  
  • Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill  Marginal success here.
  • Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement  This is only for 1040 income tax below a certain dollar amount.  Click through for exact details.  
• Creating easier access to Installment Agreements for more struggling small businessesaka In-Business Trust Fund Express Installment Agreement.  Must owe less that $25,000 and must have it paid off in less than two years or prior to the statute expiring.  Here is the number to set it up: 1-800-829-4933.
• Expanding the streamlined Offer in Compromise program to cover more taxpayers

All of these changes are now enforceable.  If you can’t make it happen, contact me to remove the guesswork.  

How do I get an IRS Installment Agreement / Pay Plan?

This blog is intended to generate discussion, so if you have questions or comments, don’t be shy!  All IRS Back Tax Help comments are in blue.  All text in black is from the original post.  

 

 

If you know you need to take action, read my thread about whether or not you should hire someone (You shouldn’t automatically) titled “How do I hire IRS back tax help?”  Here’s the link:

https://irsbacktaxhelp.wordpress.com/2011/10/31/i-owe-the-irs-back-taxes-how-do-i-hire-irs-back-tax-help/

As usual,  If you like the tone of these posts, contact me for consultation.  I can be reached at irsbacktaxhelp@gmail.com.  Before you email me, please click on and read “About IRS  BACK  TAX  HELP”.

original irs.gov post and full text here:   http://www.irs.gov/pub/irs-pdf/f9465.pdf

This is the link to fill out the form for the IRS if you owe $25,000 or less in IRS 1040 personal income back taxes.  Don’t hire anyone to help unless you meet the three reasons listed in my other post.  Take care of yourself and make this a priority!

What if I owe $25,000 or less in IRS back taxes? (IRS)

All IRS Back Tax Help comments are in blue.  If you have any questions on this topic, please refer to BP4.

If you know you need to take action, read my thread about whether or not you should hire someone (You should not automatically) titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?”

As usual,  If you like the tone of these posts, contact me for consultation.  I can be reached at irsbacktaxhelp@gmail.com.  Before you email me, please click on and read “About irs back tax help”.

IRS link to sign up online for IRS installment agreement if you owe less than $25k

Do not hire IRS back tax help unless one of the following three reasons suits your needs.  

If you owe less than $25,000 to the state or IRS, I always encourage people to try to handle the past due taxes on their own first.  Why?  Because I like to deliver ROI to people who hire me.  

When you owe less than $25k, it is hard to justify attorney’s fees to solve the problem.  There are three reasons you should consider representation if you owe $25k or less in over due IRS taxes:

1.  You simply don’t have the time.  If you are the primary revenue generator in your job or your business, have someone else handle this.  They will eliminate the guess-work, and won’t make any missteps if they are reputable, experienced, and can cover the IRS coast to coast.  Another way to phrase this is by the hour.  If your time is worth more than $250/hr, you should find someone who cost less per hour.  There are national reputable companies whose hourly rate are less than that, and you can bill your time to help solve your problem.  If your time is worth more, and you spend the time to deal with the IRS.  You are losing money and paying out money simultaneously.  Which does not pass the common sense test.  

2.  You have lost control of the situation.  If you have an IRS bank levy, an IRS wage garnishment, or IRS asset seizure, it means you have lost control of the situation.  If you do not think you have, you are wrong.  The IRS is now in control of your bank account, your paycheck, or your equity.  If this is happening to you, lawyer up.  There is a better/cheaper way to solve your back tax problem.

3.  Whatever the IRS is demanding to pay your back taxes doesn’t make sense.  If the IRS installment agreement, or wage garnishment, or full paying the over due tax will damage your immediate future, or your life over the long haul, don’t agree to it.  If you owe back taxes, there is a solution that will pass the common sense test, insist on it).  If you feel like their solution to solve your back tax problem will cause other problems, do not agree and ruin your life, get help now from someone who can fix this problem and allow you to recover and move forward with your life.  

How do I handle the IRS if I owe the IRS 1040 back taxes of $25,000 or less?  

(this is for 1040 income taxes owed.  If you owe IRS 941 payroll tax the rules are different.  If you have IRS payroll tax problems, email me or post your questions here.  The IRS is more strict about payroll tax solutions.)

“You can make monthly payments through an installment agreement if you’re not financially able to pay your tax debt immediately. Before you apply:

• File all required tax returns;” This is a show stopper. File even if you can’t pay.  IRS failure to file penalty is 22%.  Do not wait.
• “Determine the largest monthly payment you can make ($25 minimum);”  Be selfish here, don’t over obligate and create other problems for yourself.  

“Apply for an installment agreement

• Apply online if you owe $25,000 or less in combined individual income tax, penalties and interest;
• Complete and mail Form 9465, Installment Agreement Request (PDF). If you owe more than $25,000, you will also need to complete Form 433-F, Collection Information Statement (PDF).”  If you owe more than $25k, hire someone.  Make sure they have a good reputation and track record, but hire someone.  They will handle it better than you will and save you money.  

“Understand your agreement, avoid default

Penalties and interest continue to accrue until your balance is paid in full.” For some reason, people think this stops if you enter a formal agreement.  It does not.  No matter what the Revenue Officer says.  “If you are in danger of defaulting on your payment agreement for any reason, contact the IRS immediately. The IRS will generally not take enforced collection actions:”  There are legal restraints, make sure they are honored.  

• “When an installment agreement is being considered;
• While an agreement is in effect;
• For 30 days after a request is rejected, or
• During the period the IRS evaluates an appeal of a rejected or terminated agreement.”

What is the best way to pay IRS back taxes if you owe past due tax?

This blog is intended to generate discussion, so if you have questions or comments, don’t be shy!  This post is about how to pay the IRS back in a way that makes sense for you.  All IRS Back Tax Help comments are in blue.  All text in black is from the original post.  If you have questions about this post, please refer to bp3, or visit the irs back tax help Official Website.  

• If you know you need to take action, read my article “IF” you should hire IRS back tax help.  (You should not automatically.) Titled “Owe IRS back taxes? When, who, and how do I hire IRS back tax help?” before you do anything else.

As usual, If you like the tone of this writing, I would like to refer you to someone who meets irs back tax help criteria.  Please contact irs back tax help.  Before you email me, please click on and read “About irs back tax help.”

Original irs.gov link and full text:  What are my IRS back tax payment options?

“Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay in full as soon as you can to minimize the additional charges.”

True.  However, if you are over-committing to try to fix this, and causing yourself other problems, a reasonable installment agreement may make more sense.  I have heard countless stories about people ending up in bankruptcy because everything else failed because all of their money was going toward a back tax problem.  

“Penalties are also assessed for failure to file a tax return so you should file immediately even if you cannot pay your balance in full.”

Very good advice, do not fall into the “I can’t pay so why should I file” blues.  It is much easier to avoid this IRS penalty altogether than it is to abate the failure to file IRS penalty.  So always file, even if you cannot pay.  

Helpful IRS phone numbers:  888-872-9829, Link2Gov Corporation at 888-729-1040, or RBS WorldPay, Inc. at 888-972-9829.

If you cannot pay in full, you should pay as much as possible to reduce the accrual of interest on your account. Please refer to Topic 158 for information needed to ensure that your payment is credited properly.  I don’t like this sentence because it doesn’t warn you of the real problem:  IRS penalty.  The IRS interest rate for past due tax is 4%, the IRS penalties are much higher literally 30-40% over what you really owe.   

You should consider financing the full pay ment of your tax liability through loans, such as a home equity loan from a financial institution or a credit card cash advance.  I’m ok with this as long as it doesn’t put your home (or other collateral) at risk.  IRS installment agreements can be renegotiated.  Defaulted loans get foreclosed.  If you’re not sure about future cash flow, an IRS installment agreement may be preferred.  

Installment Agreements

An installment agreement allows you to make a series of monthly payments over time. The IRS offers various options for making monthly payments.  In a regular IRS installment agreement, you can have up to 5 years to pay back the IRS back taxes if you need it.  

If you enter into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that you can pay each month to avoid defaulting.  If you can afford to make monthly payments, regardless of how small you should.  Do not wait for the IRS to contact you.  Doing this builds good will, and creates a history of good intent on your part.  It also mitigates the growth of IRS penalty and interest.