If you owe back taxes to the IRS you might be worried about how you'll resolve your account with the agency. The IRS has plenty of resources to track down and penalize potential tax cheats so it's always best to find a way to pay your balance as soon as possible. The good news is that you can pay your back tax bill in an affordable way by using an IRS payment plan. Before you're able to set-up payment plan arrangements though, you'll need to learn the different types of available plans for you.

Advantages of Using an IRS Payment Plan

There are several reasons why it's to your advantage to use an IRS payment plan. For one thing, the plans allow you to pay your tax bill in smaller increments which will make it easier to afford your payment. Another benefit of using an IRS payment plan is that you'll be able to keep your account current which can help you avoid punitive measures such as non-payment penalties or possible tax levies.

 

IRS Installment Agreement

The installment agreement is designed for taxpayers who are able to pay off their back tax debt in a maximum of three years. If you choose to set-up payment plan arrangements in this way you'll decide on a set amount to pay toward your debt each month and send it in with a printed voucher. Generally, you'll also be able to select which day each month you'd like to send in your payment. To sign up for an IRS installment plan you will need to complete IRS Form 9465.

IRS Partial Payment

If you're unable to pay the minimum amount determined by the installment plan, you can choose to set up the IRS partial payment plan instead. This option allows to you pay a smaller monthly amount than with the installment plan. However, qualifying for this plan is a bit more rigorous since the IRS will be able to review your financial standing every couple of years to decide if your required monthly payments can be increased. If you want to arrange for this plan you'll need to get a professional tax expert to complete IRS Form 433-A on your behalf.

Whether you owe a little or a lot to the IRS you can settle your back taxes by establishing an IRS payment plan. By choosing to set-up payment plan arrangements through a partial payment or an installment plan you'll be able to resolve your tax debt without facing unnecessary penalties.