If you’re having trouble paying your income taxes, you might be eligible for an installment plan offered by the Internal Revenue Service. The minimum monthly payment for your plan depends on how much you owe.
If you are unable to pay your taxes, you might be eligible for an Internal Revenue Service (IRS) installment plan.
Form 9465 can be submitted to the IRS via mail, phone, or online to apply for an installment agreement.
Don’t sweat it, tax warriors! We all know the feeling: tax season rolls around, and suddenly you’re staring down a mountain of paperwork and a hefty tax bill. But what happens if you can’t afford to pay everything right away? Fear not! The IRS offers several flexible payment options to help you get back on track and avoid penalties.
In this comprehensive guide, we’ll delve into the world of IRS payment plans and deadlines, answering all your burning questions:
- How much time does the IRS actually give you to pay back taxes?
- What are the different types of IRS payment plans available?
- How do you qualify for each plan?
- What are the deadlines and interest rates associated with each plan?
- What happens if you can’t afford any of the IRS payment plans?
By the end of this guide, you’ll be armed with the knowledge you need to navigate the IRS payment landscape with confidence.
Understanding IRS Payment Options and Deadlines
The IRS typically allows you to repay your taxes, along with any penalties and interest, within ten years of the date your tax was assessed. This timeframe is known as the Collection Statute Expiration Date (CSED). However, the precise period of time you have to pay may change based on your unique situation and the payment plan type you select.
Here’s a quick overview of the different IRS payment options:
- Short-term payment plan: This plan allows you up to 180 days to pay your tax bill in full, with no setup fee. However, you will still be responsible for any penalties and interest that accrue during this period.
- Installment agreement: This plan allows you up to 72 months (6 years) to pay off your tax debt, with a setup fee of $31 (or $130 if you don’t use automatic bank withdrawal). You will still be responsible for interest, but penalties may be waived in certain cases.
- Offer in compromise (OIC): This option allows you to settle your tax debt for a lower amount than what you originally owed. However, qualifying for an OIC is difficult, and you will need to provide extensive financial documentation to prove that you can’t afford to pay the full amount.
- Currently not collectible (CNC) status: This option allows the IRS to temporarily stop collection efforts on your tax debt if you are experiencing financial hardship. However, interest and penalties will continue to accrue, and the IRS may still place a lien on your assets.
Qualifying for an IRS Payment Plan
Each IRS payment plan has different requirements, but in general, you need to fulfill the following:
- You must have filed all required tax returns.
- You must not be in bankruptcy.
- You must not have an open offer in compromise.
- You must be able to demonstrate that you can afford the monthly payments.
For installment agreements, you will also need to meet one of the following criteria:
- Your tax liability is less than $50,000.
- Your tax liability is less than $25,000 and you agree to make payments through automatic bank withdrawal.
Deadlines and Interest Rates for IRS Payment Plans
The deadlines and interest rates for IRS payment plans vary depending on the specific plan you choose
- Short-term payment plan: You must pay the full amount of your tax bill within 180 days. Interest will accrue at the current federal short-term rate plus 3%.
- Installment agreement: You must make monthly payments for up to 72 months. Interest will accrue at the current federal short-term rate plus 3%.
- Offer in compromise: You must make a lump-sum payment or monthly payments for up to 24 months. Interest will accrue at the current federal short-term rate plus 3%.
- Currently not collectible status: You will not be required to make any payments while you are in CNC status. However, interest and penalties will continue to accrue.
What Happens If You Can’t Afford Any of the IRS Payment Plans?
If you can’t afford any of the IRS payment plans, you may be able to apply for CNC status or file for bankruptcy.
- CNC status: This option allows the IRS to temporarily stop collection efforts on your tax debt if you are experiencing financial hardship. However, interest and penalties will continue to accrue, and the IRS may still place a lien on your assets.
- Bankruptcy: Filing for bankruptcy can discharge your tax debt, but it is a complex process with significant consequences. You should consult with an attorney to determine if bankruptcy is the right option for you.
The Bottom Line: You Have Options!
If you’re struggling to pay your taxes, don’t despair! The IRS offers a variety of payment options to help you get back on track. By understanding your options and deadlines, you can choose the best plan for your individual circumstances and avoid unnecessary penalties and interest.
Remember, the IRS is willing to work with taxpayers who are experiencing financial hardship. If you can’t afford to pay your taxes in full, reach out to the IRS and discuss your options. They may be able to offer you a payment plan or other form of relief.
Here are some additional resources that you may find helpful:
- IRS website: https://www.irs.gov/payments
- IRS toll-free number: 1-800-829-1040
- Taxpayer Advocate Service: https://www.taxpayeradvocate.irs.gov/
Don’t let tax debt weigh you down Take action today and get back on track!
Fees for IRS installment plans
Setting up an installment plan won’t cost you anything if you can pay off your balance in 180 days.
Establishing a direct debit payment plan online will cost $31, or $107 if the plan is set up over the phone or by mail, if you are unable to pay off your balance within 180 days.
Setting up the plan online will cost $130 if you’re not using direct debit, and it will cost $225 if you set it up over the phone or by mail.
If youre a lower-income taxpayer, you may be able to reduce these fees.
Balance of $10,000 or below
Your installment plan will typically be accepted automatically as a “guaranteed” installment agreement if you owe the IRS less than $10,000 and are unable to pay the entire amount when it’s due. Under this type of plan, you must agree to pay off your balance within three years.
However, you (and your spouse, if filing a joint return) must have timely filed all of your tax returns and paid any overdue income tax during the previous five tax years. You also cant have other existing installment agreement with the IRS.
How Long Does The IRS Have To Collect Back Taxes
FAQ
How long do you have to pay IRS owed taxes?
How many months will IRS do payment plans?
How many years can IRS go back to make you pay taxes?
What happens if I owe the IRS and can’t pay?
How do I pay back my taxes?
Basically, taxpayers have three options for paying back taxes : Under an installment agreement, a taxpayer pays the amount due over a period of time. An offer in compromise typically involves settling tax debt for less than you. They can done with one lump sum payment or periodic payments with an initial payment.
How long does it take to get a tax refund?
Tax Topic 203, Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts has more information about refund offsets. We issue most refunds in less than 21 calendar days. However, if you mailed your return and expect a refund, it could take four weeks or more to process your return.
Can I pay my tax bill over time?
The IRS offers short-term and long-term payment plans that allow taxpayers to pay their bill over time. Interest and penalties for late payment will still build up while on a payment plan. You can apply for a payment plan online via the IRS’ Payment Agreement tool. An unexpected tax bill is a surprise few people want to encounter.
When can I expect my tax refund?
When can I expect my refund? (updated December 22, 2023) According to the Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue EITC and ACTC refunds before mid-February.