IRS Tax Relief Forms

If you’re behind on your tax debt, the IRS has a range of options that can help you. But to get into these programs, you have to apply. That means filling out forms.

Forms for IRS Installment Agreements

To request monthly payments on your tax debt, you should file Form 9465 (Installment Agreement Request). As of 2023, if you owe less than $50,000 and can pay off the balance within six years, you can file this form or apply online. If you owe over that amount or need more time to pay, you should file this form plus Form 433-F (covered below).

Installment agreements are relatively easy to get. But that doesn’t mean they’re your best option. Unfortunately, almost half of people default on their IRS payment plans, and that can lead to a worse situation. To ensure this is the right option for your situation, you may want to consult with a tax attorney. 

After the IRS approves your installment agreement request, the agency will ask you to complete Form 433-D, Installment Agreement, which outlines your payment plan terms. You will also provide your direct deposit information, including your bank account and routing numbers, to set up direct debit to make your payments each month.

Forms for Partial Payment Installment Agreements

If you can’t afford to pay off the tax debt by the end of the collection statute (the last date the IRS can legally collect the debt), you will also need to file Form 433-F with your payment plan request. The IRS will use the info on 433-F to determine if you qualify for a partial payment installment agreement (PPIA). 

With a PPIA, you make a monthly payment until the collection period expires. Then, the IRS settles the rest of the debt. This can save you a lot of money, but the agreement isn’t set in stone. The IRS checks your financial situation every couple of years, and if your finances improve, you may need to make higher payments or pay in full. 

Forms for Short-Term Payment Extension Due to Undue Hardship

Use Form 1127 to ask for more time if you can’t afford to pay the tax due on a tax return or from an audit. On this form, you will note the type of tax and then, you’ll explain why forcing you to pay would cause financial hardship. 

For example, you may say that paying the tax bill would prevent you from paying your home utility bills or your mortgage. You may explain that the tax bill would force you to shut your business. The IRS reviews requests on a case-by-case basis. 

You can request up to six months for tax due from a return. If the tax is due to an audit, you can request up to 18 months, unless you failed the audit due to fraud. The IRS will give you more time in rare situations. 

Check out more details about — Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship).

Forms for IRS Offer in Compromise

An offer is when the IRS lets you pay off your tax debt for less than you owe. People can save intense amounts of money through this program, but it’s hard to qualify. You should always work with a pro who vets your situation fully before promising that you can get this type of relief. 

To apply, you need to complete Form 656-B (Offer in Compromise Booklet). This booklet contains instructions and the following three forms:

• Form 656 (Offer in Compromise)
• Form 433-A OIC (Collection Information Statement for Wage Earners and Self-Employed Individuals)
• Form 433-B OIC (Collection Information Statement for Businesses)

You use Form 656 to explain how much you owe and make your offer to the IRS. Then, you use the other forms to substantiate your financial situation. If you’re applying for relief on business taxes, you will probably have to fill out both forms, and your partners may also need to fill out their own 433-A forms. 

Penalty Abatement Request Form

IRS penalties can add a lot to your tax bill. Depending on the penalty, they can double many bills. The good news is that you can apply for penalty abatement with Forms 843 (Claim for Refund and Request for Abatement). 

Form for Currently Not Collectible Status

To request currently not collectible status, you need to make a written or verbal request to the IRS. Then, you should file Form 433-F or Form 433-A and/or Form 433-B. 

The 433 forms are financial statements. You list out your income, bills, everything you own, and your debts. Then, the IRS reviews this information to see if you qualify for CNC status. If so, the agency won’t try to collect your tax debt. However, they will revisit the situation periodically to see if anything changes. If you don’t have much money and you’re trying to get the IRS off your back, this can be a great option. 

Innocent Spouse Relief Form

What if the tax debt is due to your spouse? In usual situations, both spouses are responsible for the tax due when they filed jointly. But in extenuating circumstances, the IRS will separate the tax bill. This is called innocent spouse relief. 

To qualify, you typically have to show that you didn’t know about the income related to the tax bill and that there was no reason for you to know. To apply use Form 8857 (Request for Innocent Spouse Relief). 

Note this is an extremely detailed form, and it has places where you can record information about abuse or coercion. If domestic violence is involved in your situation, you can mark the form to alert the IRS employees so they can handle your case with additional empathy. However, it’s certainly not required to disclose this on your form.   

Injured Spouse Relief Form

You should apply for this program if the IRS took your tax refund for your spouse’s debts. Use Form 8379 (Injured Spouse Allocation) to apply. 

To explain, say your spouse owes child support or back taxes from a return filed before you were married. The IRS will take your tax refund to cover the debt. To get your part of the refund, you need to apply as an injured spouse. 

Forms to Appeal Collection Actions

If you disagree with a lien or levy from the IRS, you can appeal by filing Form 12153 (Request for a Collection Due Process or Equivalent Hearing). You only have a very limited amount of time to request a CDP, and if you miss the window, you can use this form to request an equivalent hearing.

The hearing lets you explain why you disagree with the collection action. But you also need to propose alternatives. For instance, you may say that a lien will prevent you from taking out a loan against an asset. Then, you may ask the IRS to subordinate its lien so that you can take out a loan and use the money to pay your bill. 

You can use Form 9423 (Collection Appeal Request) to appeal collection actions. For example, if an IRS employee says they are going to garnish your wages, you can file this form to protest the garnishment. You must ask to speak to the employee’s manager first. Be very careful when filing this form. You can’t appeal the decision. 

To learn more about your appeal rights, you can look into Publication 1660 (Collection Appeal Rights) or talk directly with a tax professional.

Forms to Remove Tax Liens

There are a few different forms that you can use to ask the IRS to withdraw, subordinate, or discharge a tax lien. All of these concepts have unique applications, and a tax attorney can direct you to the right option for your situation. 

To ask the IRS to withdraw a tax lien, you should file Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien). You can use this form in the following situations:

• The lien was filed early.
• The IRS didn’t follow the right procedures when filing the lien. 
• You’re making payments, and your payment plan agreement didn’t say that a lien would be filed. 
• You will be able to pay the tax more easily if the IRS withdraws the lien. 
• Withdrawing the lien is in the best interest of you and the government. 

Then, provide a written explanation to back up your request. 

To request a lien subordination, file Form 14134 (Application for Certificate of Subordination of Federal Tax Lien). You should use this form if you want the IRS to put its lien behind another creditor. For example, this often applies if you want to use an asset as collateral to pay your tax debt. 

For lien discharge, you should use Form 14135 (Application for Certificate of Discharge of Property from Federal Tax Lien). This is when the IRS removes a lien from a specific piece of property. 

Form to Request Help from the Taxpayer Advocate Service

The Taxpayer Advocate Service is an independent part of the IRS, and they can help when you can’t fix an issue through the regular channels. They can also intervene if an IRS employee is not respecting your rights. To get their help file Form 911 (Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order)).

Get Help With IRS Forms

You don’t want to just file tax relief forms blindly. Instead, you need to ensure that you’re applying to the optimal program for your situation. Then, you need to ensure that you fill out the form as accurately as possible. 

Some details are straightforward, but many of these forms require written explanations. A tax attorney who understands the tax code and what the IRS wants to hear can help you create the strongest possible argument. 

The IRS website notes the amount of time required for each of these forms. It breaks down the process into studying the tax code, gathering information, and filing the form. With many of these forms, the IRS estimates at least eight hours and sometimes longer. However, in a lot of cases, the agency really underestimates the amount of time it would take to learn about the tax code. 

You don’t have to deal with this on your own. To get help filing these forms or making a plan to resolve your tax debt, contact us today. At Damien’s Law, we work hard to get our clients the best results possible. We can help you navigate the maze of IRS and state forms that you need to file to get relief. 

Paperwork is a grueling but necessary part of the tax relief process. To get the best results for your situation, you need to fill out the forms completely and accurately. For help, contact us at Damiens Law today. Or check out the following resource for links to IRS tax relief forms and instructions.

If you’re behind on your IRS payments and receiving notices like the CP14, CP503, or CP504, don’t panic. A payment plan may be the solution for you. Our skilled tax attorney can help you set up a payment plan that works with your budget and gets you back on track with the IRS. We understand that times can be tough, and we’re here to help. Don’t let your IRS liability get the best of you – give us a call today.

What are the benefits of an IRS payment plan?

There are several benefits to setting up an IRS payment plan. First, it can help you avoid IRS penalties and interest. Second, a payment plan can help you keep your tax liability from growing larger. Third, a payment plan can help you get back on track with the IRS. Lastly, a payment plan can help you keep your tax liability from being turned over to a collection agency.

What is an IRS payment plan?

The fastest way to pay off your tax debt is to make a full payment each time you file a tax return. However, while this method will help you avoid future penalties and interest, many people are unable to completely pay off tax debt at the time of tax filing. Fortunately, the IRS has several installment plans that make it easy to pay your taxes without going into debt, such as short-term and long-term payment arrangements.

What types of installment agreements does the IRS offer?

The fastest way to pay off your tax debt is to make a full payment each time you file a tax return. However, while this method will help you avoid future penalties and interest, many people are unable to completely pay off tax debt at the time of tax filing. Fortunately, the IRS has several installment plans that make it easy to pay your taxes without going into debt, such as short-term and long-term payment arrangements.

Short-Term Payment Plan

A short-term payment plan is intended for individuals who will be able to pay off their taxes within 180 days. You can apply online for this payment plan, although people can also submit an application via phone, mail, or in-person visit. You can use this payment arrangement if you owe less than $100,000 and if you have filed all your tax returns.

Long-Term Payment Plan

Long-term payment plans are designed for individuals who owe less than $50,000 in taxes, interest, and penalties and interest, and who will need more than 180 days to pay off taxes. There are a couple of long-term payment arrangements to consider, such as:

Guaranteed Installment Agreement

For individuals who owe less than $10,000, your application for an installment plan will usually be automatically approved as a guaranteed installment agreement. Under this plan, you will have three years to pay off your taxes.

Streamlined Installment Plan

A streamlined installment plan is designed for individuals who owe more than $10,000. With this plan, you will usually have 72 months to pay your taxes, and the minimum monthly payment for your tax debt will be set by the IRS.

Partial Payment Plan

A partial payment plan is an agreement you make with the IRS to settle your tax bill for less than what you owe. This is an ideal plan for individuals who cannot afford to pay the combined tax, interest, and penalties within the specified time frame of other payment plans. Individuals must owe more than $10,000 in back taxes to enter this agreement with the IRS.

Direct Debit Installment Agreement

A direct debit installment agreement is any long-term or short-term installment plan that you agree to pay via electronic debit payments from your checking account or savings account. There are many benefits of using a direct debit payment arrangement, such as avoiding late payment penalties and enjoying a reduced setup fee.

How Long Will Your Payment Plan Last?

Your IRS payment plan will usually last for a period of three years or 72 months if you are applying for a long-term plan. Most short-term plans must be fulfilled within 90 to 180 days. Other plans may have a time frame of 120 days. If you are unable to pay your taxes within the specified time frame, you may need to apply for other tax payment plans.

Is There a Setup Fee for an IRS Installment Agreement?

Most IRS installment plans have setup fees, which should be submitted with your application. The setup fee is usually determined by how you apply for your IRS payment plan and how you will make your monthly payments.

If you agree to pay your taxes via direct debit, your setup fee will be significantly less expensive than if you plan to make your monthly payments manually. Applying online is also cheaper than setting up your payment plan over the phone, by mail, or with an in-person visit to your local IRS office.

Special Waivers for Low-Income Taxpayers

A low-income taxpayer can sometimes qualify for special waivers or reduced fees when they apply for an IRS payment plan. To qualify for these special waivers, you will have to submit proof of your household’s gross monthly income to determine whether or not you are below the federal poverty level. Most of the time, the user fee for your application will be reduced to $43 and will be reimbursed when you pay off your tax bill.

What Will Your Monthly Payment Be?

Your minimum monthly payment amount will be determined by several factors, including the time frame of your payment plan, the amount of tax debt you owe to the IRS, and any applicable penalties and interest that may be added to your debt.

With some installment agreements, you may be able to set your minimum payment, while for others, the IRS may calculate your minimum payment for you by dividing your tax debt by the number of months for your installment plan.

How Are Payments Made?

Aside from direct payments from your bank account, there are many other ways to make your monthly minimum payment. Many taxpayers send payments via money order or check each month.

However, automatic withdrawals may be more convenient and may help you qualify for other benefits. If you cannot afford to pay your minimum monthly payment, you may be able to negotiate with the IRS for a smaller monthly payment amount.

Do Penalties and Interest Continue to Accrue?

Even if you are making direct debit payments from your savings account, your tax debt may accrue additional penalties and interest. For example, the IRS charges interest until the balance of your tax debt is paid in full for long-term payment plans. Your monthly payment for your IRS payment plan will usually include these penalties and the interest rate on your debt.

Do You Qualify for an Installment Agreement IRS?

To qualify for most IRS payment plans, you will need to submit a Collection Information Statement (Form 433-A) with your application if you owe over $50,000. This form is a collection of all your financial information, including information from the current tax year and your previous tax returns. Along with your individual tax ID number and personal identification information, you may also have to submit a written request with your application.

Other requirements to qualify for an installment agreement include agreeing to pay your back taxes within the specified time frame, making estimated tax payments for the current tax year, and not being involved in any tax evasion. If you meet all of these qualifications and submit all of the required forms, the IRS will approve your application within 30 days.

Fresh Start Program Qualifications

The IRS Fresh Start Program has made it much easier to qualify for long-term payment plans. In the past, taxpayers would have had to provide financial information to apply for installment agreements for debt over $25,000, which increased the likelihood of the IRS denying the application. Today, the IRS allows individuals to submit payment plan applications without additional financial information if they owe $50,000 or less.

Can You Change Your Existing Payment Plan?

Some individuals who struggle to pay the balance of their tax debt may need to change their existing payment plan, such as when their income level changes. You can apply online to revise your current agreement, or you can apply in person if you want to update your long-term payment plan.

Changing your existing IRS installment plan may be a way you can reduce your minimum monthly payment, particularly if you are a low-income taxpayer or you want to switch to automatic withdrawals.

Should You Contact a Tax Relief Company?

While individuals should be able to apply for IRS payment plans by themselves, people who owe a significant debt or who are facing penalties such as wage garnishment may need expert guidance. It may be in your best interest to reach out to a tax advisor or a tax lawyer when you apply for a long-term payment plan, especially if you are self-employed.

If you cannot afford to pay the combined tax and fees on your tax bill balance, you can work with an expert to negotiate your debt with the IRS or buy more time to get your finances in order. Tax relief strategies you may be eligible for include:

• Bankruptcy
• Currently not collectible
• Innocent spouse relief
• Offer in compromise
• Penalty abatement

Currently Not Collectible Status

A currently not collectible status can be used by individuals who will experience significant financial hardship to pay off a tax debt balance. When you apply for this status, the IRS completes an analysis of your financial circumstances.

If you are approved for this status, the IRS will stop collection efforts on your tax bill for a short period of time. You will need to continually update your financial information to stay qualified

What if I can’t afford an IRS Installment Agreement?

If you’re not able to make monthly payments on an IRS payment plan, the IRS offers other options. You can request a temporary delay in collection action or offer in compromise.

Offer in Compromise

Although similar in spirit to a partial payment plan, an offer in compromise is a program that allows you to negotiate your debt with the IRS for less than what you owe. You may qualify for this program if you truly cannot afford a monthly payment plan or if you do not have the ability to pay your tax liability in full without financial hardship, even with a payment plan.

Individual taxpayers may be overwhelmed by tax debt, but the Internal Revenue Service offers many plans and programs to help individuals pay down tax debt. Whether you are in a little debt or a lot of debt, there is an IRS installment plan ideal for your budget. Contact Damiens Law Firm, PLLC at (601) 957-9672 to learn more about IRS payment plans that may be available to you.