Robert G. Nath
Over 30 Years'
IRS and State Tax
Robert G. Nath, PLLC
1775 Wiehle Avenue
Reston, VA 20190
- What is an installment agreement?
It's a contract between you and the IRS for you to pay your back taxes in installments. The law does not require the IRS allow you to pay in installments (except in a small number of cases), but the IRS uses this authority millions of times a year. "Voluntary payments" is a phrase you may hear; it's an informal installment agreement wherein you, the taxpayer, make payments as if you were on a formal installment agreement.
- How does the IRS determine how much I can pay?
This should be an interactive process between you and the IRS. Don't hesitate to negotiate for a deal you can live with. Use IRS Form 433-F, or 433-A or 433-B, depending on your circumstances. You must fill out one or more of those financial statements, and then talk to the IRS representative to hammer out an agreement on monthly payments. Normally the IRS will use its Collection Financial Standards (http://www.irs.gov/individuals/article/0,, id=96543,00.html) to determine your "allowable" deductions from income for installment purposes. The IRS will also first see if you can pay in full, or some by a lump sum down payment.
- What if we can't come to agreement?
Then you can ask for an "independent review" of your installment agreement request, and an appeal to the Office of Appeals if necessary. You can also go to court, though it's rare to see a court case involving installment agreements.