If you are still putzing around with your taxes, it’s probably because you don’t have the funds to pay your obligation- and you’re stretching your imagination to come up with deductions.  Sorry-you don’t have a TV show, so that $ 70K for Self-Styling Adorn to keep your one strand of hair curled about your head is not going to be a viable deduction.

How about you bite the bullet?  File your taxes- and arrange for a payment plan.  It’s not as bad as you think.

 

Either you can do it- or your can authorize us (What?  You want to use a different tax advisor?  Shame on you!) to do so on behalf.

First, gather the following information:

• Name exactly as it appears on your most recently filed tax return
• Valid e-mail address
• Address from most recently filed tax return
• Date of birth
• Filing status (Single, Married Filing Jointly, Married Filing Separately, Head of Household)
• Your Social Security Number or Individual Tax ID Number (ITIN)
• Based on the type of agreement requested, you may also need the balance due amount
• To confirm your identity, you will need:
  • financial account number or
  • mobile phone registered in your name or
  • activation code received by postal mail (if the USPS is working, it takes 5 to 10 business days)
• If you previously registered for an Online Payment Agreement, Get Transcript, or any Identity Protection PIN (IP PIN), you should log in with the same user ID and password. You will need to confirm your identity by providing the additional information listed above if you haven’t already done so.

 

You have that information all ready to go? Great.  Now, for the next set of hurdles:

1. Can you pay what you owe in 120 days or less?
2. Can you pay what you owe in 6 years or less?
3. Do you owe more than $ 10K (not just now- but in total to the IRS)?
4. Do you owe more than $ 50K (not just now- but in total to the IRS)?

Based upon your answers to the four questions (and, no, it’s not Passover), here’s your plan of action.

SHORT TERM PAYMENT PLAN 

Pay in 120 days or less

You cannot use this process if you owe $100,000.01 (total- taxes due, penalties, interest) or more to the IRS.  If you are below that threshold, then this plan has a fee-free setup (yes, that means NO additional fees), but you will be required to ante up the penalties (failure to timely pay) and interest (on the amounts due) up until you’ve brought your balance to zero.  You can pay the IRS via direct pay (checking or savings account), or by check, money order, or debit/card cards.  If you elect to use your card, you will be paying for that service.

(Please note that if you call the IRS to make these arrangements- or if you drop into an IRS office or request the program by mail, there WILL be fees imposed.)

You must apply for this plan on line.  The process is pretty straight-forward if you’ve collected the information we told you above above.

LONG TERM PAYMENT PLANS

If you are not going to pay the IRS off in 120 days, then you are on a long term payment plan. These plans can be filed online or via Form 9465.  (If you haven’t filed your tax return yet, include the 9465 in your electronic tax filing; otherwise file online or pay a small fee because you mailed in Form 9465 separate from your tax submission.

 

If your income is below a threshold (< 250% of the federal poverty level), then the fee for this long term plan may be waived.  Otherwise, the fee if $ 31 (and up, as you will see shortly).  This fee assumes you are paying the IRS via direct debit (checking or savings account).  (By the way, if you owe $ 25K or more, you MUST use direct debit to effect a long term payment plan.)

If you owe the IRS $ 50,000 or less (this is not principal- this includes any penalties and interest), then you can request the payment plan on-line or via Form 9465.  Note- if you have a disregarded LLC, are a sole proprietor, or an independent contractor, your request for a payment plan with the IRS is for you as an individual.

$10,000 or less indebtedness

The IRS calls this program a “Guaranteed Installment Agreement (GIA)”.  You will pay the IRS the amount due within 3 years (36 months), and will be automatically approved if you haven’t filed a GIA in the last five years.

The IRS lets you pay via direct debit (from a checking or savings account), via payroll deduction (you must file Form 2159 with the IRS; they notify your employer), by check or money order (mailing-especially given the USPS on-time performance- must be done 10 days before the payment deadline), via EFTPS [Electronic Federal Tax Payment System], or via debit/credit card (this choice incurs additional fees).

$10,000.01 to $ 25,000- or you’ve had a GIA in the last 5 years

This “Streamlined Installment Agreement (SIA)” lets you pay your balance to the IRS over 72 months.  You can pay the IRS any way you want- but please pay them on time or they will negate your agreement and increase the penalties.

You can employ the same payment methods stipulated above for the GIA.

$25,000.01 to $ 50,000 due to the IRS

This is still an SIA, but these payments must be paid via direct debit from your checking or savings account or via payroll deduction (Form 2159, as shown above, required) from your employee paycheck.

$50,000.01 or more due to the IRS

Payment plans for these sums require additional IRS scrutiny.  Not only must Form 9465 be filed, but you must complete a much more detailed investigatory schedule, Form 433-F.  Oh- and a Federal Tax Lien will be applied and reported to the credit bureaus.  This is why I always work with my clients to get the amount below this threshold.

 

 

 

 

 

     

WHAT HAPPENS IF I SCREW UP?

If you miss a payment, if a direct debit is refused because you have insufficient funds, you can request a reinstatement after the default.  The IRS usually  approves the reinstatement, but there is a $10 fee for the reconsideration (unless you are a low income taxpayer).  This same fee applies if you wish to alter an existing plan.

 

Now, aren’t you glad that you don’t have to deal with the IRS anymore this year?