If you cannot pay right away, but have the assets and/or income to pay the amount owed over time, an installment agreement may be a good choice for you.

An installment agreement is the most common method for individuals to arrange payment for back taxes owed with the IRS. Even if you are filing your taxes and know you cannot pay the entire amount owed, people typically send in the installment agreement form with their tax return. IRS installment agreements are typically very easy to obtain when the tax amount owed is under $25,000, but can be a bit harder to obtain, but very doable with amounts over that.

Filing for an IRS Installment Agreement

You can file for an installment agreement once you have filed your taxes and know you will not be able to pay or once you have been assessed with back taxes. There are three ways you can file for an installment agreement.

1) Installment Agreement Request Form (IRS Form 9465)

-You can print this form and fill it in, fill in the form on the computer in the PDF file and then print, then send to the IRS address specific in the instructions on the second page of the form.

2) File Online using the Online Payment Agreement Application (OPA)

-Doing this online usually takes around two hours and is fairly easy.

3) Over the Phone by Calling 1-800-829-1040

-You cannot setup everything over the phone, they will mail you information after talking with them and you will still have to mail to the IRS.

Before you file you must know the amount of taxes you owe, including interest and penalties, how much you will be able to afford to pay every month, have copies of your tax returns and your bank account number if you plan on doing direct debit.

When setting up an installment agreement you will also have to pay a one time fee. The fees are the following:

-$52 for a new installment agreement that is direct debit.
-$105 for a new installment agreement that is not direct debit. (payroll deduction, credit card, online payment option, money order or check)
-$45 for restructuring or reinstating an existing installment agreement.

The IRS will accept or reject your installment agreement request within a 30 day period. The IRS must accept your request if you meet some basic requirements. Those basic requirements are that you owe less than $10,000 in back taxes and with the minimum monthly payment you selected, the total amount will be paid of in 3 years or less.

Once an installment agreement is accepted by the IRS it cannot take further action against you and will not seize any assets or add anymore interest or penalties. The IRS can back out of the installment agreement if there is a missed payment, you fall behind on other taxes that are due to the IRS, you do not give updated financial records when requested by the IRS or the IRS finds out that you gave false information when setting up your installment agreement. If you do miss a payment due to a change in financial condition it is important to contact the IRS immediately. Once payments are missed the IRS can place a lien on your assets or they could begin to levy.

Partial Payment Installment Agreement
This is a option for individuals that do not meet the requirements for a regular installment agreement

Other IRS Payment Plans
Setting up a payment plan with the IRS can sometimes be the easiest solution to dealing with back taxes. See what payment plan fits your situation the best.

IRS Penalty Abatement
Eliminate penalties and interest if you have legitimate reason for falling behind and not paying back taxes owed on time.

Delay IRS Collections
If you just need more time to pay and want to delay the IRS collection system you can easily get extensions.

Currently Not Collectible
Prove to the IRS that you do not have the means to pay your back taxes with your current financial standing. Hold of IRS until you can pay or until statute of limitations expires.

Tax Professional
Tax Professionals can be the best option for many people when dealing with a lot of money and complex tax problems.