When you owe back taxes and just need a little more time, setting up a payment plan with the IRS is sometimes your best option. A payment plan with the IRS is also known as an “installment agreement”. Installment agreements are payment plans with the IRS that give taxpayers the ability to pay their back taxes over time.

When Will the IRS Give You a Payment Plan?

In many cases, the IRS will give you a payment plan for back taxes and want to pay your taxes over time. This will often depend upon various different factors, such as:

  • how much you owe in back taxes
  • how long you’ve owed your taxes for
  • how long a period of time you need to pay your back taxes
  • if you have the ability to pay your taxes now
  • if you have filed all your back tax returns
  • if you have paid other taxes that you owe
  • if you have paid estimated tax payments, etc.

Should You Call Yourself the IRS to Get a Payment Plan?

Well, that depends. How much does the IRS say you owe? Do you agree with this? Are you current with your tax filings? Are you current with other taxes you may owe?

In the easiest tax problem resolution cases, where you owe back taxes and can pay the whole amount in less than 120 days, you can usually call the IRS and ask for an extension of time to pay them. But not so fast! When you call the IRS be prepared to disclose your current address, where you have your bank accounts, where you’re working and other personal information that will aid them in the collection of your taxes if you don’t pay. If that’s not a problem, and you owe them less than $10,000, go ahead. If not, you should really consider professional representation from a taxpayer problem resolution specialist.

What If You Owe Less Than $10,000? in Back Taxes?

$10,000 is the “majic” number with the IRS. In most cases, where you owe less than $10,000, you will almost always qualify automatically for an installment agreement to pay your back taxes over time. In order to qualify, you will need to have filed all your back tax returns, be current with your tax payments (estimated taxes or federal withholding) for the current tax year. If you’re not current with your tax payments, or haven’t filed all your back tax returns, you will not qualify for an IRS payment plan until you file your back tax returns at a minimum. In those cases where you haven’t filed all your back tax returns, hire a taxpayer problem resolution specialist to get your more time and prepare your back tax returns.

What if You Owe Less Than $25,000 in Back Taxes?

If you owe more than $10,000, but less than $25,000 it gets a little more complicated. In these tax problem cases, we can still get you a payment plan with the IRS fairly easily, where you owe less than $25,000 and meet all the other conditions necessary to qualify. We may ask you to agree to a direct debit agreement, where your tax payments will be taken out from your bank account automatically every month. In cases where you owe less than $25,000, the financial disclosures to the IRS are very limited. You will need to provide the IRS with details of your banking information, credit card information, real estate you own, your monthly income and expenses.

What if You Owe More than $25,000 in Back Taxes?

If you owe more than $25,000 in back taxes and are looking for an installment agreement to pay your back taxes, you will almost always be required to provide the IRS with more detailed financial information in determining whether or not you qualify. In cases where you owe more than $25,000, you will be required to provide significantly more financial information for a more complete analysis on how best to settle your tax debt.

Have More Tax Payment Plan Questions?

If you have more tax questions, you can read our other articles on setting up a payment plan with the IRS on our website or call our office for a free telephone consultation without obligation. You can also write to us or chat online by typing in the Online Chat Window located on the right hand side of your screen. We’re available to answer your questions most every day from 9 AM to 5 PM EST and welcome your call. We are not affiliated with the IRS or any other law enforcement agency. We are a licensed, certified public accounting firm that specializes in tax problem resolution. All inquires are fully confidential and will never be disclosed to others.