March 03, 1993
IRS Announces Streamlined Monthly Payment Plans
WASHINGTON - You've finished your tax return and the bottom
line is you owe money -- more than you can afford to pay right away.
What should you do? You should consider asking the Internal Revenue
Service for an installment payment agreement. This year, the IRS
even has a new request form to make the process easier than before.
Taxpayers who cannot pay their bills in full can fill out Form
9465, "Installment Agreement Request" and send it to the IRS.
Taxpayers can now request payment agreements when they file by just
attaching the request forms to their balance due returns. In the
past, taxpayers could not request payment agreements until they
filed and received bills from the IRS. Taxpayers can expect to get
a decision back from the IRS within thirty days.
The IRS said that it changed its procedure as part of its
overall strategy to help taxpayers resolve payment problems quickly
and easily. Allowing taxpayers to request a payment plan at the
time they file their tax returns removes inability to pay as a
potential reason for not filing.
The IRS cautioned that monthly payment plans may not be the
best choice for all taxpayers. Taxpayers who make monthly payments
are still liable for interest and late penalty of one-half percent a
month on any unpaid amounts. When this penalty is added to the
current 7 percent interest rate, the cost to taxpayers who enter
into payment agreements is an annual rate of 13 percent on their
Before requesting an installment agreement, taxpayers should
consider other, less costly, alternatives. Taxpayers may be able to
obtain loans at banks or other lenders with more favorable rates. If
taxpayers do decide to request installment agreements, they should
pay as much with the returns as possible -- thereby reducing any
interest and penalties due.
In addition to allowing taxpayers to request installment
agreements at the time of filing, the IRS has made several other
improvements to installment agreement procedures: -- All offices
within the IRS can now improve agreements up to $10,000. Before
this change, only collection division could work accounts over
$5,000. -- For accounts under $10,000, the IRS no longer requires
taxpayers to complete financial statements. -- If the IRS does not
require a financial statement and the taxpayer adheres to the
payment schedule, the IRS will not file a federal tax lien.
Taxpayers requesting an installment agreement when they file
their tax returns should attach the completed Form 9465 to the top
of their tax returns. Form 9465 is available by calling IRS
toll-free at 1-800-TAX-FORM.
At the end of the fiscal year 1992 there were 1.5 million
taxpayers paying back $5.6 billion through monthly payment plans.
According to the IRS, the average length of these plans was 14
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