Darrin Mish: IRS installment agreements: Answers to your questions. Hi, my name is Darrin Mish, and I'm an attorney whose practice is located in Tampa, Florida. We represent clients nationally and internationally with their problems with the IRS.

I'm here today to answer some common questions that people have about IRS installment agreements. What are they? How do you get one? Are there different types? Do I have to full pay how much I owe to the IRS? How long can I get one for? And those types of questions.

Well, there are basically three types of installment agreements, in my opinion. There's something called a streamlined installment agreement, which I'll explain in a minute. There's one called a complex installment agreement. And lastly, there's something called a partial pay installment agreement.

First, the streamline. Streamline is called what it is, because basically if you owe under $25, 000. There are a bunch of other conditions, where they can technically deny you the right to a streamlined installment agreement. I don't have time to go into those right now.

But basically, if you owe under $25, 000 and you can afford to pay that liability over a 60 month time frame, you can get what's called a streamlined installment agreement.

So let me give you some numbers. If you owe $25, 000 and you want to pay that out over 60 months, if you go ahead and do the math it's going to come out to just about somewhere in the $450 a month range. Something like that. I don't have the math in front of me; it's something like that.

That's not going to full pay because there's penalties and interest. You're going to want to offer somewhere in the $500 a month range. That's going to be what's called a streamline installment agreement.

The next, I call a complex installment agreement. I'm the only person I've ever seen call it that. But if you owe over $25, 000, it's going to be much harder to get an installment agreement. You're going to have to justify what you can afford to pay on the installment agreement, no more, no less.

Now if you've watched the offer and compromise videos that I did, you will understand what I'm talking about. In brief, what you're going need to do is you're going to need to fill out a collection information statement of some sort. You're going to have to haggle with the IRS over what your ability to pay is on a monthly basis.

So if you owe $80, 000 and they think that your monthly ability to pay is $1, 200, guess what your payment's going to be? Bingo! $1, 200.

Now, there are probably some people watching this video right now who think, "$1, 200? Oh my goodness! I can never pay that!" And I tend to agree with you. I think that that's a pretty high payment for almost every circumstance.

The key to this to negotiating a lower payment in this particular instance is going to really know how the collection information statements work. Really understanding what an allowable expense is, and some pre planning before you try to go ahead and get your installment agreement.

That's why you need someone like me to help get involved into your IRS problem mess, so that we can negotiate the lowest payment possible.

The third installment agreement type is called a partial pay installment agreement. It's called a partial pay because, by definition, the amount of your payment will not full pay the liability during the life of the statute. What do I mean by the life of the statute?

Well, you might recall from an earlier video actually, there's a video on the collections statute that the IRS does not have an unlimited amount of time to collection a tax liability. They only have ten years from the date of the assessment of the tax to do so.

So, if you're in a situation where you have 36 months left on your longest collection statute, and you owe let's just make it real round numbers $36, 000.

So you have 36 months left, and you have $36, 000 in tax liability, if you are going to do a complex installment agreement, you would pay something like $1, 000 a month minimum. Hopefully you can afford that, according to your financial statements.

But if you couldn't afford the $1, 000 a month, you're not going to full pay that liability over the life of the statute. Hopefully you follow that. So, if all you could afford to pay was $300 a month with a 36 month statute, you would only pay something like $9, 000, give or take, over the life of the statute.

That's why it's called a partial pay installment agreement. You'll never full pay the liability.

Now, these things are supposed to be reviewed every two years by the IRS. I have a theory that they're not going to be reviewed every two years. They haven't been around all that long.

But in my opinion, the IRS does not have the manpower to review every one of these things every two years, so I would suggest that if you get yourself into a partial pay installment and you have more than two years left, you're going to want to go ahead and pay that thing on time every time, so you can keep the sweetheart of a deal that you have going.

Now, there are some other requirements for a partial pay installment agreement, the first of which is that you have to exhaust all equity supplies, or all equity and assets. So if you have a home and you have some equity in your home, you're going to need to exhaust that by paying to the IRS, before they're going to let you into a partial pay installment agreement.

I know, I know. I don't like that rule either. But it is what it is, and it's something that we have to deal with.

Sometimes, we can successfully argue that there is no equity in a house, and that's again why you need a professional to try to help you out with that.

The required documents that you're going to need for an installment agreement, pretty much for everything but a streamline installment agreement. So for a complex or for a partial pay, you're going to need a 433A, a 433B if you're in business.

Again, if you have an LLC or a corporation, you're going to need a Form 433F if you're dealing with the automated collection system, which are those very nice people that you speak to on the toll free number typically. Check your notice.

If your notice says to call 1 800 829 7650 or 1 800 829 3903, you guessed it you're dealing with ACS. That's why you can't seem to understand why they're not nicer to you.

So if you're dealing with those folks, you're going to need to use a Form 433F. Typically, you're going to have to provide three to six months' worth of documentation proving your expenses and income.

If you want to request a streamlined installment agreement, I would suggest that you go ahead and use a Form 9465 and you follow the directions about where to send that, depending on where you live.

That's pretty much it, folks, for installment agreements. I know this is short. It's by no means comprehensive, but I wanted you to have an understanding of the three types of installment agreements that were available to you, and what the benefits to all three were going to be, and what the hurdles might be for all three.

Listen, my name is Darrin T. Mish, and for everyone back at the office in Tampa, Florida, I say thank you for watching. Take care.