The IRS can be picky when making determinations to approve taxpayer’s request to pay the IRS over time when they owe the IRS over $10,000. If the information is not complete or the IRS believes it is inaccurate, it is very likely that they will deny the installment agreement.
Here are some common reasons for denial:
- Information on IRS form 433-A or 433-B is incomplete.
- The information you provided in your filing is not accurate or the IRS has reason to believe it is not accurate. The IRS will check the information you provided against income documents and public records to make sure all information is listed properly.
- The IRS doesn’t trust you will make payments on time, maybe because you had an installment agreement before and you defaulted on some of the payments.
- The IRS thinks your living expenses you listed are not necessary.
If your installment agreement is denied, you can still negotiate with the IRS. Many times the issue can be cleared up with some detailed explanations of items that they questioned. It is a possibility that you made a mistake filling out the form and you will need to submit a revised one to include all valid information. The best way to start resolving your problem is by calling the IRS at the phone number that is listed on the document you received that denied your request. Sometimes issues can be cleared up over the phone if you are able to show you are being honest and want to come to a resolution.
If you cannot clear up the problem by calling then you have several other options that should be considered.
- File for an Appeal: Before requesting an appeal you must first request a conference with the collection manager to discuss the disagreement. If you cannot resolve the disagreement with the collection manager then you can request appeals consideration. In order to file a tax appeal you can file IRS Form 9423 and check the box that says “Denial of Installment Agreement” and describe why you disagree and attach as much documentation as you can.
- Contact the Taxpayer Advocate: If you cannot get your installment agreement in place and the fact that you are not being entered into an installment agreement will cause financial hardship then it is a possibility that you will qualify to use the Taxpayer Advocate services.
- Contact a tax professional to help: If you do not qualify for an installment agreement could mean that you would be a better candidate for another form of settlement. A tax professional can analyze your financial situation and make a determination as to the best settlement method for you.
Most of the time an installment agreement decision can be turned around by working with the IRS on errors or to clarify things on a filing, so don’t give up if your installment agreement request is denied the first time.