If you owe the Internal Revenue Service (IRS) tax debt but are unable to pay the full amount at once, you may be eligible for an installment agreement. This agreement allows you to pay your debt in smaller, more manageable payments over an extended period of time. Here`s how to set up an installment agreement with the IRS.

Step 1: Determine Your Eligibility

Before you begin the process of setting up an installment agreement, you need to determine whether you are eligible. Generally, you are eligible if:

– You owe less than $50,000 in combined tax, penalties, and interest

– You have filed all required tax returns

– You are able to pay off your debt within 72 months (6 years)

– You are willing to pay any additional penalties and interest that accrue during the payment period

Step 2: Choose Your Payment Plan

Once you have determined your eligibility, you need to choose a payment plan that works for you. The IRS offers several different plans, including:

– Guaranteed Installment Agreement: If you owe $10,000 or less and can pay off your debt within 3 years, you may be eligible for a guaranteed installment agreement.

– Streamlined Installment Agreement: If you owe between $10,000 and $50,000 and can pay off your debt within 72 months, you may be eligible for a streamlined installment agreement.

– Partial Payment Installment Agreement: If you are unable to pay your full debt amount within 72 months, you may be eligible for a partial payment installment agreement. This plan allows you to pay a smaller monthly payment over a longer period of time, but your debt may not be fully paid off.

– Non-Streamlined Installment Agreement: If you owe more than $50,000 or can`t pay off your debt within 72 months, you may be eligible for a non-streamlined installment agreement. This plan requires more paperwork and documentation and may require the IRS to review your financial situation before approving.

Step 3: Apply for an Installment Agreement

Once you have chosen your payment plan, you will need to apply for an installment agreement. You can do this by:

– Completing Form 9465, Installment Agreement Request

– Filing your tax returns and paying as much as you can upfront

– Providing proof of income, expenses, and assets if you are applying for a non-streamlined installment agreement

– Paying a fee that ranges from $31 to $225, depending on the type of agreement you choose

Step 4: Follow Through on Your Payments

Once your installment agreement has been approved, it`s important to follow through on your payments. Make sure you pay your monthly installment on time to avoid additional penalties and interest. If you are unable to make a payment, contact the IRS immediately to discuss your options.

In conclusion, setting up an installment agreement with the IRS is a great way to manage your tax debt if you are unable to pay it off in full. By following the steps outlined above, you`ll be on your way to resolving your debt and avoiding any further financial troubles.