Managing your tax obligations can sometimes be challenging, especially if you find yourself unable to pay the full amount owed to the IRS by the designated deadline. The good news is that the IRS offers payment plans, known as installment agreements, to help taxpayers fulfill their obligations over an extended period. But what if your circumstances change and you need to modify your existing agreement? Is that even possible? In this article, we’ll review the circumstances when the IRS may allow you to alter your existing payment plan.
Making Modifications to an Existing Payment Plan Online
The IRS will allow you to make certain changes to your existing agreement by using their Online Payment Agreement tool. Simply log into the tool to do any of the following:
- Change your monthly payment amount
- Alter your monthly payment due date
- Convert an existing agreement to a Direct Debit agreement
- Change your banking information (routing and account number)
- Reinstate your account after you default
If you attempt to lower your monthly payment and it does not meet the minimum requirements, you’ll be prompted to adjust the amount. Should you be unable to make the minimum required, follow the directions for completing and submitting Form 433-F, Collection Information Statement, or Form 433-B, Collection Information Statement for Businesses.
If you are unable to make the necessary changes online, you can contact the IRS directly at 800-829-1040 (individual) or 800-829-4933 (business). It’s also important to note that fees may apply when making any changes to your existing agreement.
Changing to a Different Payment Plan
In some cases, it may be possible to transition your current IRS payment plan to a different type of plan. For example, if you have a short-term payment plan and need more time to pay, you can request that your plan be changed to a long-term installment agreement.
Additionally, if you find that you owe taxes on the current tax year, it may be possible to amend your agreement to include the new balance. Just be sure to request the change to your agreement before the due date of your current tax bill. Failure to do so may result in default of your existing IRS payment plan.
Although the IRS may agree to amend your plan to include the new tax debt, you should also take steps to ensure you’re not in the same position again the following tax year. Be sure to update your withholding or make estimated tax payments to avoid future problems.
Submitting an Offer in Compromise
It’s possible that even after adjusting your agreement or extending the payment period, you may find that you are unable to make your payments as required. If this happens, you may be able to settle your tax debt for less than you owe by submitting an Offer in Compromise (OIC). The process of being approved for an OIC, however, is not easy. You must demonstrate severe financial hardship and it can take several months for the IRS to make a decision. If you decide to pursue this type of tax relief, we strongly encourage you to speak with a tax professional before submitting any paperwork to the IRS.
It’s important to note that any changes to your IRS payment plan must be approved by the IRS and you should comply with their requirements and guidelines. We also recommend contacting the IRS directly or consulting with a tax professional for personalized assistance and guidance based on your specific situation. For a free consultation, contact Tax Defense Network at 855-476-6920.