Tax CPA explains 2012 Form 9465 and Form 9465-FS IRS Installment Agreements and Form 13844 | What if I can’t pay my taxes?

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. Naturally the IRS has ways to help you comply. 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 reduce 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 request 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.
• Interest is charged. 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.

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

• 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 additional 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.

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.