Steps & Forms To Prepare An Installment Agreement

If you are unable to pay your total tax debt and you owe less than $15,000, you qualify for an installment agreement. An installment agreement will allow you to pay in small amounts each month toward your entire tax bill. Below we will list everything you need to apply for an installment agreement, including which forms to send to the IRS.

Form 433-A & Form 433-B

The first thing you need to do is fill out Form 433-A and/or Form 433-B. These forms are called Collection Information Statement for Wage Earners and Self-Employed / Collection Information Statement for Businesses.

Form 433-A:

Form 433A

Form 433-B:

form 433B

Steps To Take To Prepare An Installment Agreement

After you have filled out these two forms, you should write a written statement explaining to the IRS why you owe the amount of debt you do and why you cannot pay the IRS at this point in time.

Copies Of Your Tax Returns

Next you should prepare copies of your latest filed tax return, Form W-2 and Form 1099. Other tax returns may be requested by the IRS, it would be a good idea to have them handy incase this happens.

Proof Of Tax Filings

Put together some proof that you are current with all of your tax filings and requirements given by the IRS for estimated tax payments. The more proof, the better. If you can show the IRS without a doubt you are current, it is more power to you.

Pay Stubs & Proof Of Income

Gather together all your old pay stubs and income information to show to the IRS why you are currently unable to pay your total liability but are able to make installment payments over time. Again, the more proof you can assemble to show the IRS you are unable to pay your entire liability, the better.

Bank Account Statements

The IRS also wants to view your bank account statements for at least the past three months. You will need to assemble all your deposit items, cancelled checks, and bank statements for the previous three months for examination by the IRS. It is possible they may ask for additional months, keep these documents handy just incase.

Property Rights

All the information you can gather together detailing property that you own is going to be requested by the IRS. This includes, when you bought the property, how much you paid for the property, the current market value of the property, and things of this nature. If you have had a recent appraisal of your property, you can include a copy.

Vehicle Ownership

The IRS is going to want to view evidence of ownership of all your vehicles. This includes showing copies of titles, lease agreement, purchase agreement, and statements from the lender. You should also show copies of the amount you still owe on the vehicle if you currently have a loan. Last you will need to show the currently market value of the vehicle if possible.

Life Insurance Policies

Life insurance policies are going to be verified by the IRS. To show verification, include copies of documents that show the type of policy, dates, amounts, current cash surrender value, policy loans and so on.

Shares Of Corporations

If you own shares in a corporation(s), the IRS is going to want to see proof. Assemble all the documents that show what you own and how much you own of each corporation.

Documents Of Liability

If you have outstanding liabilities, you need to make copies to prove your debts. These can include a mortgage, car loan, accounts payable, notes payable and other types of liabilities outstanding.

Living Expenses

All your living expenses need to be shown to the IRS to verify you are unable to pay your total tax debt balance. These can include utility bills, food, clothing and bills showing expenses that are needed to live.

All of these documents should be copies sent to the IRS in a well-organized binder. You want to show the IRS that you are serious and well organized in your case for an installment agreement.

Here is the Form 433-D ( Installment Agreement ) :

Form 433D

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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