Financially Verified Installment Agreement Guide & Process

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With a financially verified installment agreement, you make monthly payments on your tax debt, but to get the agreement approved, you give the IRS detailed financial information about yourself. The key difference between this agreement and a guaranteed or a streamlined installment agreement is that you verify your financial situation.

Who Should Use Verified Financial Agreements?

Traditionally, the IRS requires taxpayers who owe over $50,000 to verify their financial details to get an installment plan. Additionally, if you owe between $25,001 and $50,000 and you have recently defaulted on an installment plan, you also need to apply for a verified financial agreement.

However, in 2017, the IRS rolled out new criteria on when taxpayers need to verify their financial details. Under the new rules, you only need to verify your financial details if you owe more than $100,000 or if you owe between $50,001 and $100,000 and aren’t willing to set up direct debit payments. The IRS is testing this new arrangement until September 2018. At that time, the agency plans to decide whether or not to make the changes permanent.

How Do You Verify Your Financial Details?

To share financial details with the IRS, you need to fill out Form 433-F (Collection Information Statement). This form is a streamlined version of forms 433-A (Collection Information Statement for Earners and Self-Employed Individuals) and 433-B (Collection Information Statement for Businesses). In some cases, the IRS may request these other forms.

Form 433-F requires detailed information about your financial situation. It requests details about all your assets, income, and debts. The IRS looks at this information to determine if you can pay more. If you can avoid sharing this information with the IRS, you may want to do that.

For example, if you owe $60,000 or a similar amount under $100,000, you may want to set up payments to come automatically out of your bank account. That way, you don’t have to verify your financial details. In contrast, imagine that you refuse to set up automatic payments and the IRS requires you to submit 433-F. After reviewing that form, the IRS decides that you need to make more substantial monthly payments or sell some assets. If you had just set up the direct debit payments in the first place, you probably could have avoided that situation.

Requirements for Financially Verified Installment Agreements

Here are most of the criteria to qualify for a financially verified installment agreement.

  1. Taxes you owe is more than $100,000 including fees and interest.
  2. The balance you owe between $50,001 and $100,000 and don’t want to set up direct debit payments.
  3. All required tax returns for the last five years.
  4. Your spouse (if applicable) has filed all tax returns for the last five years.
  5. No payments are currently being made on an IRS installment agreement.
  6. Currently, you are not in bankruptcy.
  7. An offer in compromise has not been accepted in recent years for your tax debt.
  8. You can pay off your tax debt within 72 months if you owe less than $50,000 or within 84 months if you owe between $50,001 and $100,000.
  9. You have submitted Form 9465 (Installment Agreement Request) and Form 433-F.
  10. The balance of the debt cannot be paid in full b your savings, stocks, bonds, or retirement accounts.
  11. You cannot borrow the money against existing assets or sell your assets to cover the debt.

How to Apply for a Financially Verified Installment Agreement

Follow these steps if you want to apply for one of these payment plans.

  1. File all required back tax returns. The IRS requires this for all tax settlement and payment agreements.
  2. Fill out Form 9465 (Installment Agreement Request).
  3. Complete Form 433-F. Gather details about your income, assets, debts, and other personal finances before you start filling out the form. You need those details to fill out the form correctly.
  4. Calculate your estimated monthly payments. With a financially verified installment agreement, you have to take your assets into account when making your payment proposal. To make those calculations easier, you may want to work with a tax professional such as a CPA or an Enrolled Agent.
  5. Make copies of three months worth of financial data (bank records, paycheck stubs, income statements from your business etc) to include with Form 433-F.
  6. Write a check or get a money order for the application fee. As of 2017, the fee is $225 or just $107 if you agree to make payments through direct debit.
  7. Consider including the first month’s payment. This is not required, but it can help to show the IRS you are serious about repaying your tax debt.
  8. Make copies of all your forms before sending them to the IRS. If something gets lost, these copies can be essential.
  9. Double check everything on the form—mistakes can lead to rejections.
  10. Sign and send everything to the IRS.

What Happens After Applying for a Financially Verified Installment Agreement?

Usually, the IRS responds to installment agreement requests within 30 days. With financially verified installment agreements, the IRS may require you to liquidate some assets before approving your agreement. If your installment agreement gets approved, make the payments on time. Make sure that you have enough money in your account to cover the payments if you signed up for automatic payments.

If the IRS rejects your installment agreement, you can appeal using Form 9423 (Collection Appeal Request). You have 30 days after receiving your rejection letter to appeal. Make sure to reach out to the IRS during this window of time. If you don’t, the IRS can start collection activity on your tax debt after the 30 days have elapsed. You only get one chance to appeal so it’s especially important to get help.

Installment Agreement Help

Installment Agreement Help
Do you need help with an Installment Agreement? Our Tax Team (IRS Agents, Tax Attorneys, Tax Lawyers, CPAs) can ensure proper filing of an affordable tax payment plan for your financial situation.

Guaranteed Installment Agreement
Perfect for taxpayers who owe the IRS less than $10,000 excluding penalties and interest

Streamlined Installment Agreement
Good for individuals that owe $100K or less and business that owe $25K or less and don’t want to provide detailed financial information.

Partial Payment Installment Agreement
Ideal for individuals who are in serious financial trouble and will have trouble with 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 Offer In Compromise
Settle IRS back taxes for a fraction of what is owed if you can prove you meet strict IRS specifications.

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