Form 9465 is the IRS Installment Agreement Request form that is used to help settle tax debt. If you owe $50,000 or less, you may be able to establish an installment agreement online, even if you have not yet received a bill for your taxes. Go to IRS.gov to apply to pay online.
What is an IRS Installment Agreement?
An installment agreement allows the taxpayer to breakdown their tax debt into manageable payments. Usually an installment agreement requires equal monthly payments based on the amount of taxes owed, the amount of money the IRS can collect at one time, and the amount of time they are allowed to collect the funds from the taxpayer. Installment agreements are not an ideal way of paying a tax debt, since the taxpayer will still accrue late payment penalties and interest over the life of the agreement.
How start an IRS Installment Agreement with Form 9465?
To arrange an installment agreement with the Internal Revenue Service, download Form 9465, Installment Agreement Request, from the IRS’s website and fill in the amount that you can pay each month, the day you wish to make your payment each month (consider choosing the 28th day, the last monthly date the IRS will accept), your name, address, social security number; etc. Generally, you can have up to 60 months to pay. In certain circumstances, you can have longer to pay or your agreement can be approved for an amount that is less than the amount of tax you owe (these two alternatives are not explored in this article).
Requesting IRS Installment Agreement for Tax Debt
Your request for an installment agreement cannot be turned down if the tax you owe is not more than $10,000 and all three of the following conditions apply:
- During the past 5 tax years, you (and your spouse if filing a joint return) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment agreement for payment of income tax.
- The IRS determines that you cannot pay the tax owed in full when it is due and you give the IRS any information needed to make that determination.
- You agree to pay the full amount you owe within 3 years and to comply with the tax laws while the agreement is in effect.
After the installment agreement is approved, the IRS will send you a monthly notice showing the remaining amount you owe, and the due date and amount of your next payment on a detachable voucher.
Approval of Installment Agreement
The IRS will usually let you know within 30 days after we receive your request whether it is approved or denied. However, if this request is for tax due on a return you filed after March 31, it may take us longer than 30 days to reply. If we approve your request, we will send you a notice detailing the terms of your agreement and requesting a fee of $120 ($52 if you make your payments by direct debit). However, you may qualify to pay a reduced fee of $43 if your income is below a certain level. The IRS will let you know whether you qualify for the reduced fee.
Who should not file Form 9465?
Do not file this form if you are currently making payments on an installment agreement or can pay your balance in full within 120 days. Instead, call 1-800-829-1040. Do not file if your business is still operating and owes employment or unemployment taxes. Instead, call the telephone number on your most recent notice. If you are in bankruptcy or we have accepted your offer-in-compromise, see Bankruptcy or offer-in-compromise, in the instructions
If you do not make your payments on time or do not pay any balance due on a return you file later, you will be in default on your agreement and we may take enforcement actions, such as the filing of a Notice of Federal Tax Lien or an IRS levy action, to collect the entire amount you owe. To ensure that your payments are made timely, you should consider making them by direct debit.
If you are in bankruptcy or we have accepted your offer-in-compromise, do not file this form. Instead, call 1-800-829-1040 to get the number of your local IRS Insolvency function for bankruptcy or Technical Support function for offer-in-compromise.
How to Pay IRS Installment Agreement?
If you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as you pay your tax debt in full, you can reduce or eliminate your payment of penalties or interest, and avoid the fee associated with setting up the agreement.
Form 9465 IRS Installment Agreement
If you choose, during the entry of your information for Form 9465, to set up monthly Electronic Funds Withdrawals for your installment request you will be prompted to enter your banking information. Then, when you proceed through the electronic filing steps you would want to select Mail a Check on the screen titled E-Filing – Federal Balance Due Options. You do this because in the event the IRS does not approve the installment request, the Form 1040-V voucher that will print with the return is what you would use to submit payment.
Paying the IRS Installment Agreement
You would NOT want to enter your banking information under the Direct Withdrawal selection because that would result in the entire amount being withdrawn all at once. The banking information for Form 9465 you would have already entered in the Q&A section for Form 9465. In a later screen during the filing steps you will be prompted to view and/or print the Federal E-File Instructions. Those instructions will explain that filing Form 9465 does NOT guarantee your request for a payment plan and that the IRS will contact you to notify you of the status of your request for an installment plan.