How to Apply for IRS Installment Agreement: A Step-by-Step Guide

Key Takeaways:

• Applying for an Internal Revenue Service installment agreement is quickest through the online payment agreement tool, accessible on the IRS website.
• To complete the online application, you’ll need an ID.me account, a photo ID, a Social Security number or EIN, and bank account details.
• For those unable to apply online, options include filing Form 9465 by mail or calling the IRS for assistance.
• Setup fees vary based on the application method, with potential reductions for low-income taxpayers, and direct debit is the preferred payment method to avoid missed payments.

Applying for an IRS installment agreement may seem daunting, but it's a practical way to manage tax liabilities. Whether you're an individual or a business owner, the IRS offers options to ease the burden of a large tax bill. The quickest method is using the online payment agreement tool on the IRS website, which allows for a streamlined application and potential immediate approval. Alternatively, you can file Form 9465 by mail or contact the IRS by phone. 

Access here the Online Payment Agreement Application

Setup fees vary based on the application method, with reductions for low-income taxpayers. Choosing direct debit can help avoid missed payments and ensure a smooth repayment process. By understanding the steps and gathering necessary documentation, you can effectively manage your tax obligations.

Applying for a Payment Plan Online

To apply online for a payment plan, visit the IRS website and access the online payment agreement tool. If you’ve used the IRS portal before—for example, to retrieve your tax transcript or PIN—you can use your existing login.

Otherwise, you’ll need to create an ID.me account. To complete your online application, make sure you have:

• A valid email address
• Photo identification (driver’s license, state ID, or passport)
• Your Social Security number or Employer Identification Number (EIN)
• Access to a smartphone or webcam for ID verification
• A checking account or savings account with your routing and account numbers
• Multi-factor authentication access via phone or email

Once your online payment agreement application is submitted, you may receive immediate notification if your plan has been approved.

Applying by Phone or Mail

If you can’t apply online, you can apply for a payment plan by:

• Filing Form 9465 (Installment Agreement Request) via mail
• Calling the IRS main line at 800-829-1040
• For businesses, call the business payment plan line at 800-829-4933
• Considering a short term payment plan if you owe under $100,000, which allows you to settle your tax debts within 180 days. Eligibility criteria and potential fees apply.

Assistance is typically available Monday to Friday, 7 a.m. to 9 p.m. Eastern Time.

How to Calculate Your Monthly Payments

If you’re entering into a long-term payment plan, you’ll need to estimate your monthly payment amount. The IRS generally expects your tax liability to be paid within 72 months.

Taxpayers qualify for different plans based on their total tax liability and other criteria.

Quick tip: Divide your total tax bill by 72. For example: $14,400 ÷ 72 = $200 monthly payments

You can change your monthly payment later by submitting a request through the IRS system.

Setup Fees and Payment Methods

Setup Fee (Depending on How You Apply):

• $0 – Short-term plan (under 180 days). Taxpayers who owe less than $100,000 in combined tax may qualify for this plan.
• $31 – Long-term plan via direct debit and online application
• $107 – Long-term plan by mail or in person with direct debit
• $149 – Long-term plan without direct debit
• Low income taxpayers may qualify for reduced or waived fees

How to Pay:

• Direct debit (also known as a Direct Debit Installment Agreement [DDIA]) is preferred and often required
• Electronic Federal Tax Payment System (EFTPS) or the federal tax payment system
• Money order or debit/credit card (note: paying by credit card includes a ~2% fee, and money order or debit incurs ~$2 in processing fees per transaction)
• Automatic withdrawals from your bank account are the safest way to avoid missed payments

What Happens After You Apply

Once you apply for IRS installment agreement, the IRS reviews your online application or form. If everything is in order, you’ll receive immediate notification via the online tool or by mail.

Taxpayers can manage their online payment plan through the IRS website.

During review, the IRS typically pauses collection actions. If approved, your monthly payments begin on the date you selected.

Conclusion

Applying for an IRS installment agreement can be a straightforward process if you utilize the resources available, such as the IRS's online payment agreement tool. By understanding the steps involved, gathering the necessary documentation, and choosing the best payment method for your situation, you can effectively manage your tax liability over time.

Whether you're in Dallas, TX, or anywhere else, remember that taking action early can help you avoid additional tax penalties and interest. Whether you're a qualified taxpayer or an authorized representative, with careful planning and timely payments, you can pay off your balance and regain financial stability. For more detailed guidance, consider consulting with an experienced tax attorney in Dallas, TX or using the IRS resources available online.

Contact Margolies Law Office Today for Expert Tax Assistance

Margolies Law Office specializes in helping individuals and businesses navigate complex tax issues, including applying for IRS installment agreements. Our experienced team is dedicated to providing personalized solutions tailored to your unique financial situation.

Don't let tax concerns overwhelm you. Contact us today to schedule a consultation and take the first step towards resolving your tax matters efficiently and effectively. Reach out to Margolies Law Office and let us guide you to financial peace of mind.

Frequently Asked Questions (FAQs)

1. How do I apply for an installment agreement with the IRS?

To apply for an installment agreement with the IRS, you can use the online payment agreement tool on the IRS website for the fastest approval. Alternatively, you can submit Form 9465 by mail or call the IRS directly for assistance. Make sure you have your identification and financial information ready to complete your application.

2. How much is the 9465 installment agreement fee?

The setup fee for Form 9465 can vary based on how you apply. For a long-term plan via direct debit and online application, the fee is $31. Applying by mail or in person with direct debit incurs a $107 fee, while a long-term plan without direct debit is $149. Low-income taxpayers may qualify for reduced or waived fees.

3. How long does it take for an IRS payment plan to be approved?

Once you submit your application, you may receive immediate notification of approval if you apply online. For applications submitted by mail or phone, the approval process may take several weeks. During this time, the IRS typically pauses collection actions.

4. What disqualifies you from an IRS payment plan?

Factors that may disqualify you from an IRS payment plan include having a tax liability exceeding $100,000, failing to file necessary tax returns, or not having the ability to make the required monthly payments. Additionally, if you have defaulted on a previous installment agreement, you may be ineligible.

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