An installment agreement allows the taxpayer to break down their tax debt into manageable payments. Usually an installment agreement requires equal monthly payments based on the amount of taxes owed, the amount of money the IRS can collect at one time, and the amount of time they are allowed to collect the funds from the taxpayer. Installment agreements are not an ideal way of paying a tax debt, since the taxpayer will still accrue late payment penalties and interest over the life of the agreement.
Form 9465 can be used to request an installment plan, but it should not be used if the taxpayer plans to pay their tax debt within 120 days or if they wish to use the IRS Online Payment Agreement Application to apply for an installment agreement.
The IRS will notify the taxpayer within 30 days of receiving the agreement if it has been approved or denied. Agreements for less than $10,000 will generally be accepted as long as:
- During the last 5 years, the taxpayer (and spouse if filing jointly) has timely filed all income tax returns, paid any amount due, and have not previously used an installment agreement.
- The IRS determines that the taxpayer cannot pay the taxes owed when they are due in full, and the taxpayer gives the IRS any information needed to make the determination.
- The taxpayer agrees to pay the full amount within 3 years and agree to abide by tax laws while the agreement is in effect.
To create Form 9465, from the Main Menu of the tax return (Form 1040) select:
- Miscellaneous Forms
- Form 9465 - Installment Agreement Request
- Personal Information - Review and update the information here as needed.
- Payment Details - Enter any additional balances due that are NOT included in the current amount owed above. This should include any prior year unpaid amounts.
- Amount Paid when Efiling - Enter the total of any existing installment agreement plus any other adjustments or balances due.
- Monthly Payment Amount - The minimum monthly payment equals the sum of the amounts owed less the amount being paid with the return divided by 72 months. Enter the amount the taxpayer is willing to pay each month. If there is an existing installment agreement, this amount includes the total of all liabilities. If no amount is entered the IRS will use the minimum. If the amount entered is less than the minimum, an additional menu line will display:
- Monthly Payment Day - Enter the day of the month (from 1-28) the taxpayer will make the payment. This includes payments by direct debit or otherwise. An entry here is required.
- Check this box if you will mail payments - Payments should be mailed in a timely manner.
- Payments made using Direct Debit - - Enter the bank information for payment by direct debit.
- If you're unable to make electronic payments through a debit instrument by providing your banking information, click here and your user fee will be reimbursed upon completion of your installment agreement. If you establish an installment agreement that is not paid by direct debit, you may qualify to pay a reduced fee of $43 or for a reimbursement of your fee if you are a low-income taxpayer, as defined below. See Low-income taxpayer user fee waivers and reimbursements next. The IRS will let you know whether you qualify for the reduced fee. If the IRS doesn’t say you qualify for the reduced fee, you can request that the IRS consider you for “low-income” status using Form 13844, Application For Reduced User Fee For Installment Agreements.
Note: This is a guide to creating Form 9465 in the TaxSlayer Pro program. This is not intended as tax advice.
Additional Information: