Financially Verified Installment Agreement Guide & Process

A Verified Financial Installment Agreement is for taxpayers who owe the IRS more than $25,000. Taxpayers typically need to negotiate with the IRS. This Installment Agreement (IA) has many names but is different from a Streamlined or Guaranteed IA because you are required to disclose full financial disclosure by completing the appropriate Collection Information Statement (form 433 A or B, depending on whether you are a business or wage earner). The IRS wants to know your complete financial situation because if your tax amount is larger than $25k, they may require you to liquidate assets in order to bring your balance down.

Some Financially Verified Installment Agreement Requirements

1. More than $25k in back taxes or tax debt (including penalties and interest)
2. The taxes owed are not more than 5 years old and you have filed tax returns
3. You don't have any other IAs currently with the IRS
4. You are not in bankruptcy (or filed for it) or had an Offer In Compromise Accepted
5. No IRS Installment Agreements in the last 5 years (there are exceptions to this sometimes)
6. You agree to pay your taxes over time (generally within the CSED) and fill out form 433 and form 9465
7. You don't have sufficient money in savings, stocks, bonds, or retirement accounts to pay the taxes off
8. You are unable to borrow the money from a financial institution

Financially Verified Installment Agreement Process Guidelines

1) File All Tax Returns - This is a must if you want to apply for any tax settlement or payment agreement

2) Fill Out Form 9465 or work with a tax professional. The Form will have directions as well to follow.

3) Figure Out Your Monthly Payment: This is a bit more difficult to calculate other than a Streamlined or Guaranteed Installment Agreement. It is best to work with an Enrolled Agent or CPA here because some negotiating will be needed in most cases.

4) Fill Out Correct 433 Form - Collection Information Statement: This is where things can get tricky. However, you will need to show all income, assets, debt and more that describes your financial situation in clarity. This is where a CPA or an Enrolled Agent can be very useful as this form can be challenging.

5) Include the User Fee with Your First Month's Payment - Just like other installment agreement, there will be a user fee for setting up this payment plan. Direct Debit or Payroll Deductions are always best in order to avoid missed payments. The User Fee is $52 if Using Direct Debit or ACH, and $105 if by Check or by a payroll deduction.

6) Put Your Signature and Send It To The IRS - Make sure to have copies of everything that you are sending them and as a good gesture include the first payment for the agreement you are requesting, as well as the user fees. If you are working with tax professionals (recommended), the service will include this.

Before it accepts a payment plan over $25k, the IRS may require you to sell some assets to lower the total balance. In considering time, you will get a response within 30 days or less and a confirmation letter with the payment terms. If the IA is rejected, the IRS will not make collection efforts on your property for at least 30 days. You can always appeal an IRS Installment Agreement request if it was denied.

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