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When my business partner and I found ourselves in a land investment that was abandoned by the developers, we had no reasonable economic choice but to walk away from our mortgage loan.  While we understood that there would likely be tax consequences, the magnitude of our exposure was not fully anticipated.  Thankfully, Mr. Bode was able to work with us to strategize a defensible tax position and mitigate the tax implications of our investment loan abandonment.  I would recommend that anyone facing an investment loss that has tax implications due to debt forgiveness give Gary a call.  It is always best to fully understand the circumstances and the tax rules and related options before paying a hefty bill.  Thanks Gary!

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Tax CPA explains 2013 Form 9465 and Form 9465-FS IRS Installment Agreements and Form 13844 | What if I can’t pay my taxes? | Form 433-F

Form 9465 CPA Installment Agreements

Here are some tips for folks self-preparing Form 9465 to set up an Installment Agreement with the IRS. (910) 399-2705.

Tax CPAs often help set up Installment Agreements.  Mostly through Form 9465 or Form 9465-FS. The IRS enforces a “pay as you go” system for collecting taxes, but some folks still come up short on tax day. You’re not alone, this happens to all types of taxpayers. In 2013, CPAs still see fallout from the Recession. Naturally the IRS has ways to help you comply with your tax obligations. I’ll discuss using Form 9465 or Form 9465-FS, Installment Agreement, to set up a monthly payment plan with them.

Form 9465 and Form 9465-FS Generalities

  • If the IRS determined the amount due through a Notice, make sure it’s correct.
  • There’s a fee: But they might cut it if you qualify (see Form 13844 below).
  • Down Payment: you can choose how much you pay up front.
  • Period: payments are monthly.
  • Payment Amount: you can choose the monthly payment amount.
  • Time Frame: you can ask up to 72 months to pay off your taxes. But usually the taxpayer backs into a time frame via their choice of down payment and monthly payment. Just make sure it’s less than 72 months for smooth sailing. Note the 72 months can be extended under certain circumstances.
  • Choose your Payment Date: you can choose the day of the month you pay the IRS.
  • There’s interest. It’s generally less than credit card interest rates, but, probably more than a home equity loan.
  • They prefer direct debit: They’ll draft it from your checking account.
  • Use Form 9465 for tax liability amounts less than $25,000.
  • Use Form 9465-FS for tax liability amounts between $25,000 to $50,000.
  • They require Form 433-F if the amount is greater than $25,000. You’re revealing all your finances to the IRS.

Installment Agreement Trap

Just because the IRS is flexible and non threatening on Form 9465 doesn’t mean they are casual creditors. This is still the IRS. Consider your choices carefully. I don’t they’re brutal. But you can eventually wear out their patience.

Tax CPA Tips to Gauge your Installment Agreement Payment Amount on Form 9465 or Form 9465-FS

  • Pay your Installment Agreement in full: Save extra money in a separate account while making the required monthly payments. Then, when you can pay the Installment Agreement in full, do so.
  • Go low on the monthly payment: Don’t risk missing a payment. In my experience, the taxpayer wants to pay the IRS as quickly as possible. So, they choose a high monthly amount. Well, the IRS has got you locked in. If you can’t make a payment, you have problems.
  • Go low on the down payment: Instead keep a month’s payment in reserve, just in case. Stuff happens!
  • Don’t send in extra amounts: Unless you can pay it off in full (see below). OK, you’ve got an extra $300 and want to send it to the IRS as an extra payment. But don’t expect the IRS to take that into account if you can’t make a monthly payment later on. Your payment is your payment. Every month.
  • Consider an Offer in Compromise: Periodically review your qualifications for an Offer in Compromise while paying off a Form 9465 Installment Agreement. Maybe the IRS will accept less as payment in full.

Form 13844 Application For Reduced User Fee For Installment Agreements

The IRS charges a fee to set up an Installment Agreement through Forms 9465 and 9465-FS. But they offer a sliding rate discount to qualifying folks. Take a look at Form 13844 to read the criteria.

I’m a tax CPA with a virtual office to accommodate long distance clients. Life’s too short to run to your CPA’s office. For a free phone consult, please call (910) 399-2705.

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7 comments to Tax CPA explains 2013 Form 9465 and Form 9465-FS IRS Installment Agreements and Form 13844 | What if I can’t pay my taxes? | Form 433-F

  • Hello,
    I have heard that if after 3 installments are paid out of my checking account I can submit a IRS Form 12277 and have the tax liens removed in order to improve my credit score and hopefully this will help me qualify for a FHA home loan. I have been paying by mail for over 18months and have a bal of $11,000. I have never missed a payment of $200/mo

    • OK Mark, it sounds like you might fit the profile. Good payment record and small amount. You might be able to assert they’ll get paid faster if the with draw the lien. I don’t know that your stated goal will fly as the IRS is more interested in their money than your potential house. Try a different spin perhaps.

  • Mark

    I keep hearing IRS but what about the State taxes? I live in California how does installment plans work for states?

    • Hi Mark. The State obligations do get buried as I post for a national audience. Every State has installment agreements. I’d call the CA DOR and ask. They’re nice Folks BTW. In fact that’s how I handle most State issues, even here in NC. They give us a leg up so to speak. Hope that helped.

  • David Woodruff

    I filed a Offer & Compromise in August of 2013 and never heard back from the IRS. So I called them in January of 2014 and finally got an answer in September of 2014. I made an offer of $2000 on a $26500 IRS debt resulting from unpaid 1040 for 2008-2012. I did pay my 2014 taxes on time. The agent did not make a counter offer even though I showed a negative cash flow on my 656. I was so flabbergasted that I agreed to pay $125 a month for 2 years then increasing to $314 a month then. and when they sent me the paperwork it said I could not appeal. I am 67 have no 401k live month to month I get soc sec and a small retirement. My wife is a consultant dietitian and receives monthly checks which I put down on a 433b. I am diabetic, have Atrial Fibrilation, and am a vet. How I owe $27500. Help Woody Woodruff

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