Form 9465

Description

Form 9465 - If you cannot pay the full amount you owe shown on your tax return (or on a notice the IRS sends to you), you can ask to make monthly installment payments. You will be charged interest (and possibly penalties) and a $43 fee if your request is approved. Don't send the fee with Form 9465, the IRS will send you a letter if your request is approved with payment information.

Form 9465 Tax Tips

Once your tax bill has been established, you basically have three options available if you are not able to pay the full tax bill. Each of these options can get complicated. Professional tax advice should be sought to best choose the option that meets your tax situation. Remember to file your tax return on time even if you don't have the money to pay your tax. The penalty for not filing your return is 5% of your tax liability a month up to a maximum of 25%.

Option 1 - Installment Agreements - If you owe less than $10,000 in taxes, you are legally entitled to an installment agreement if you meet certain conditions. Fill out Form 9465 and attach it to your return. In order to minimize your penalties and interest you should pay as much tax as you can when you mail in your tax return. Put down the amount that you can pay each month keeping in mind that the bill must be paid off within 3 years (including interest and penalties). Once the IRS receives your Form 9465, they will contact you with information on how to make the payments.

The conditions for the automatically-accepted installment agreement are: (1) the tax due is less than $10,000, (2) you have filed all of your tax returns in the previous five years, (3) you have paid all of your income taxes in the past five years, (4) you have not had a previous installment agreement in the past five years, (5) you agree to pay your liability within 3 years, and (6) you agree to meet all your future tax liabilities. If you don't meet the conditions for the automatic installment agreement, you can still file Form 9465 to see whether the IRS will accept an installment agreement with you.

Option 2 - Offer in Compromise - If you do not have the ability to pay your full tax bill even if you are given extra time to pay it, consider making an offer in compromise. Basically, the IRS looks at your current assets and your potential future income in determining whether the offer in compromise you propose is acceptable. If all the IRS can get from you is 10 cents on every dollar of tax liability, the IRS will probably accept an offer in compromise of 10 cents on the dollar. The dollar amount of your offer is not important. What is important is the dollar amount the IRS feels it can obtain through its collection efforts. If you offer less than what the IRS feels it can collect, then your offer will be rejected. Use Form 656 as well as Form 433-A (and Form 433-B if you are an owner in a business) in preparing your offer. Send these forms to the IRS separate from your tax return. Form 433-A is a financial statement that lists all of your assets, liabilities, monthly income, and expenses. A qualified tax professional will greatly increase your chances of a successful offer and can help you analyze any potential traps in making an offer in compromise. If you do the forms yourself, get a book that gives detailed instructions on how to do offers in compromise. If you are thinking about declaring bankruptcy, you should consult a lawyer before filing an offer in compromise.

Option 3 - Bankruptcy - If done right and if certain rules are met, your federal and state income tax liabilities can be discharged by declaring bankruptcy. Consult a competent attorney who has a good knowledge of the tax laws. The timing of when you file your bankruptcy is crucial. If you file bankruptcy to soon, your tax liabilities will not be discharged.

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