What is Form 9465?
IRS Form 9465 is a document you can file to formally request a monthly installment payment plan in the instance you cannot pay what you owe on your federal tax return. In most cases, it is a good idea to pay part of your tax debt and then ask for an installment plan for the leftover balance.
Each year, there are thousands of Americans who find out they owe much more in taxes than they are financially prepared for and cannot feasibly pay off all at once. Fortunately, the IRS has systems in place to help reduce the burden of these financial requirements; instead of demanding an immediate lump sum, you can pay your tax debt back in monthly installments within 60 months.
What happens if I don’t pay my tax debt?
If you fail to pay your tax debt, the government has the legal right to seize assets, garnish your wages, and take other actions to settle your debt. The government can also file a tax lien or place an official IRS levy on your assets. You may be able to avoid these serious consequences by filing an installment agreement request with Form 9465.
The official IRS Form 9465 allows you to reduce the burden of large tax debt by breaking it up over a period of months or years, as long as you are approved and meet the required conditions.
What are the IRS Form 9465 instructions?
To file IRS Form 9465, you’ll need to follow a specific process depending on how much you owe:
- If you owe more than $50,000, you will need to send in your IRS 9465 by mail. Typically, you can simply attach this form to the front of your tax return when you file your taxes. The form can also be submitted by itself. In addition to filing Form 9465, you’ll also need to submit Form 433-F. This document provides the IRS with financial information which tax officials will use to determine your ability to pay your debt. You may also need to provide proof of income and living expenses.
- If you owe less than $10,000 on your taxes, your installment agreement request will be automatically approved by the IRS as long as you’ve properly and timely filed all of your income tax returns. Another stipulation is that you must not have used an installment payment plan within the last five years.
Where do I mail Form 9465?
You’ll need to determine which specific IRS location to send your installment agreement request to by consulting the Form 9465 instructions section on the IRS website. The mailing address varies based on a given taxpayer’s location.
Can I file Form 9465 online?
If you owe $50,000 or less in taxes, penalties, and interest, you might be able to submit an online installment agreement application through the IRS website. You can also call 1-800-829-1040.
What are the payment installment methods?
There are a variety of ways a taxpayer can repay their tax debt in a monthly installment plan. Below are the options you can choose from, including what the IRS charges for each method:
- Check, money order, or credit card: $149 for online payment, $225 for mail
- Direct debit: $31 for online payment, $107 for mail
- Payroll deduction installment agreement: $120
Fees can be waived or reduced if the tax-payer is designated as a “low-income taxpayer”.
Note: You must make payments on time by the date specified in your agreement. Payments can be submitted between the 1st and 28th of a month. If you are late on any of your payments, your account is immediately in default which may result in more severe consequences.
With that said, you have the ability to change your installment agreement online. For example, you can change the payment dates and which method you use to pay each month. However, the IRS charges an $89 fee to change the installment agreement.
The IRS charges interest on the unpaid balance of your debt, and you may be subject to late fees on past-due payments.
What fees are associated with an installment payment agreement?
The IRS will charge a daily compounding interest rate that’s equivalent to the short-term federal funds rate plus 3%. This rate is calculated each quarter.
The IRS may also charge a failure-to-pay penalty which ranges. Keep in mind that the total penalties and interest can add up to 9% to 12% on an annual basis. So, taxpayers must be prepared to pay not only their principal balance but also the fees associated with paying off their tax debt.
If possible, it is in your best interest to try to make more than the minimum required monthly payments to reduce the financial burden of these peripheral charges. It is also prudent to pay off as much tax debt as you can from the beginning so that your intital principal loan debt balance when starting your installment plan is smaller. By doing so, you’ll end up paying less in fees and interest.
When should I not use Form 9465?
- If you can pay the total amount you owe in taxes in 120 days or less.
- If you want to use an online payment agreement (simply apply online).
- Your business is still in operation and you still need to pay employment or unemployment taxes. If this is the case, call the number on the most recent notice to ask for an installment agreement.
For more advice on when to file Form 9465, enlist the help of a Community Tax professional who can help solve your tax-related needs.