The IRS does offer a payment agreement options for taxpayers who are unable to pay their taxes on time. But, qualifying for the payment agreement depends on your particular tax situation. Most taxpayers, whether individual or business, can apply for a payment agreement. But, there are some situations where the IRS will not agree to such an arrangement.
How Do You Apply for a Payment Agreement?
There are two options for applying for a payment arrangement: online and through the mail.
Online payment arrangement applications are available to both individuals and businesses in specific situations. Options available including paying in full, requesting a short-term agreement (less than 120 days) and requesting a long-term agreement (longer than 120 days). Everyone can apply online to pay in full. But, there are restrictions on the short and long-term agreements.
Individuals, including sole proprietorships and independent contractors, can apply online in the following situations:
- Short-term agreements where the taxpayer owes less than $100,000 in taxes, interest, and penalties.
- Long-term agreements where the taxpayer owes less than $50,000 in taxes, interest, and penalties.
Businesses can apply online for the following:
- Long-term agreement where the business owes less than $25,000 in taxes, interest, and penalties
- If your tax situation does not fall into these specific situations, you will need to make your request in writing. You do this by filing the following forms:
- Form 9465, Installment Agreement Request
- Form 433-F, Collection Information Statement
When Will the IRS Reject a Payment Agreement?
The IRS wants to collect the past due taxes in a timely fashion. If they find that you have a lot of liquid assets, they may reject the payment agreement. If you cannot make their minimum payment amount, they will automatically reject the agreement.