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IRS Installment Payments
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Description/Scope
Skill Level Time Estimate Materials Equipment-Tools Library Resources Pre-requisite Knowledge
Purpose
This will discuss how to make monthly payment arrangements to pay any taxes owed to the Federal Government.
Who This Applies to
Those who cannot pay all the tax on a tax return.
When to Perform
As soon as possible.
Special Circumstances
For
various reasons, you may not be able to pay your federal individual income tax
in full. Do not delay filing your tax return because you are unable to
pay in full. If your tax return is not filed on time, you may have to pay a
"failure-to-file" penalty, in addition to a "failure-to-pay"
penalty, and interest.
Why This Is Important
Usefulness
General Benefits 7 Objectives
Text
This entire site is for educational or informational purposes only. You are not to use the forms, concepts, strategies, or knowledge without assistance from a professional. The author, the corporation, the ISP, Bob Parrish CPA, Bob Parrish CPA, P.C. or other parties related to those or this site do not guarantee or warrantee in any manner the suitability, usefulness, accuracy, timeliness, or results of any portions of this site, nor the links contained in this site which link to other areas. At times, information is taken from other sources and is believed to be accurate, but no verification or confirmation is performed. Furthermore, if any federal or state law invalidates a portion of this disclaimer, the other portions still apply. In addition, any allegations or actions are restricted to arbitration only and must be arbitrated by the Better Business Bureau in Sarasota Florida. Reading of these pages constitutes complete acceptance and agreement with all disclaimer provisions on all pages of this site. .......
Monday, February 23, 2009 09:48 AM
If you can't pay in full, file your tax return on time and attach either a completed Form 9465, Installment Agreement Request, or your own written request for a payment plan, to the front of your return. (Specify the amount you can pay and the day you wish to make your payment each month.) You should pay as much as you can with the return, (to lower the interest and penalty charges). If you have already filed your return and have received a notice, or bill, requesting payment, you may attach a completed Form 9465 or your own request to the notice and mail it in the envelope provided. The IRS will let you know, usually within 30 days, whether your request is approved, denied, or if additional information is needed. If approved, a one-time user fee of $43 will be charged.
It is important not to ignore an IRS notice. If you neglect or refuse to make payment or other arrangements to satisfy your obligation in full, we may take enforced collection action (filing a notice of federal tax lien, serving a notice of levy or offset of a tax refund).
The
unpaid balance is subject to interest, compounded daily, and a penalty which is
added on the 15th of each month. It is in your best interest to pay your
liabilities in full as soon as you can. You might consider a bank loan, or cash
advance on your credit card. For a user fee, we may be able to offer an
individual payment plan based on monthly installments.
Do not sign any documents that extend the ordinary 10 year statute of
limitations. Sometimes the government will request you to sign such a
document. In most instances there is no need to extend the 10 year
statute. Just say no. In addition you have taxpayer rights to
request the IRS to not file or to remove any Federal Tax Liens while you are
making installment payments. You will want to call and/or read the booklet
on "IRS Collections -
Working Things Out".
For current interest rates, go to News Releases and Fact Sheets and find the most recent Internal Revenue release entitled Quarterly Interest Rates.
In addition, if you filed on time but didn't pay on time, you'll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, up to 25 percent. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.
Beginning January 1, 2000, if you filed a timely return and are paying your tax pursuant to an installment agreement, the penalty for late payment of an installment is one-quarter of one percent for each month, or part of a month, that the installment remains unpaid.
If you did not file on time and owe tax, the penalty is even higher. There is a combined penalty of 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%. After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid. Thus, the total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. Also, if your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100% of the tax required to be shown on the return.
Also, see Tax Topic 653, IRS Notices and Bills/Penalty and Interest Charges.
Law (commentary and citation)
Regs (commentary and citation)
Cases (commentary and citation)
§§§ Law §§§
§274(d)
§§§ Regs §§§
§§§ Cases §§§
This is about Activity Based Taxplanning - maximizing deductions, minimizing cash outlay and maximizing the amount of cash retained and the net worth.
Tax is a subject that many view in order to cut costs. Taxes are a cost just as any other cost. It happens this cost is somewhat intangible and is defined by legislation without a tangible item to view and control. The money is spent and the control of the expenditure is more appropriately administered by someone trained in the law.
This is about Activity Based Costing - methods to cut costs, management accounting, management information systems, decision support systems - in general about being a manager.
Entrance Interview
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From Banking Records
From Customer Records
From Signed Documents
From Your Other Business, or Financial Records
From Corporation or Organization Records (meetings, etc.)
What to do:
Assistance - What to do
Forms - Checklists - Etc.
Financial Statement Presentation
Notes to Financial Statements
How to Make Entries
What Kind of Records to Keep
Bookkeeping Methods - Cash, Accrual and Other
How the Business Entity Affects the Recording
Sole Proprietor
Corporation - C & S
Partnerships - General, Limited, Limited Liability Company, Registered Limited Liability Partnership or Company
Trusts
Tax Exempt
Compliance Checklist
Action Checklist
Alerts & Dangers - Risks
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Your Defense
It is important not to ignore an IRS notice. If you neglect or refuse to make payment or other arrangements to satisfy your obligation in full, we may take enforced collection action (filing a notice of federal tax lien, serving a notice of levy or offset of a tax refund).
The
unpaid balance is subject to interest, compounded daily, and a penalty which is
added on the 15th of each month. It is in your best interest to pay your
liabilities in full as soon as you can. You might consider a bank loan, or cash
advance on your credit card. For a user fee, we may be able to offer an
individual payment plan based on monthly installments.
Do not sign any documents that extend the ordinary 10 year statute of
limitations. Sometimes the government will request you to sign such a
document. In most instances there is no need to extend the 10 year
statute. Just say no. In addition you have taxpayer rights to
request the IRS to not file or to remove any Federal Tax Liens while you are
making installment payments. You will want to call and/or read the booklet
on "IRS Collections -
Working Things Out".
tp_advocacy_installments_intro.htm
