© by Robert G. Nath, Esq.

1. What is an installment agreement?
   
   It’s a contract between you and the IRS for you to pay your back taxes in installments. An excellent reference, with links to all required instructions and paperwork, is found at http://www.irs.gov/businesses/small/article/0,,id=108347,00.html. The law does not require the IRS allow you to pay in installments (except in a small number of cases), but the IRS uses this authority millions of times a year. “Voluntary payments” is a phrase you may hear; it’s an informal installment agreement wherein you, the taxpayer, make payments as if you were on a formal installment agreement.
   

Back to FAQ List

2. How does the IRS determine how much I can pay?
   
   This should be an interactive process between you and the IRS. Don’t hesitate to negotiate for a deal you can live with. Use IRS Form 433-F, or 433-A or 433-B, depending on your circumstances. You must fill out one or more of those financial statements, and then talk to the IRS representative to hammer out an agreement on monthly payments. Normally the IRS will use its Collection Financial Standards (http://www.irs.gov/individuals/article/0,,id=96543,00.html) to determine your “allowable” deductions from income for installment purposes. The IRS will also first see if you can pay in full, or some by a lump sum down payment.
   

Back to FAQ List

3. What if we can’t come to agreement?
   
   Then you can ask for an “independent review” of your installment agreement request, and an appeal to the Office of Appeals if necessary. You can also go to court, though it’s rare to see a court case involving installment agreements.

Articles by Robert G. Nath On-Line:

FAQs on IRS Procedures

Tips on IRS Procedures - 2006

Robert G. Nath has focused on IRS matters for over 30 years. He holds degrees from Yale, the University of Pennsylvania, and Georgetown University. After clerking for a federal judge, Mr. Nath litigated tax cases for 8 years with the Tax Division, U.S. Department of Justice. Since 1984, he has been in private practice, representing individuals, entities, accountants and attorneys before the IRS and in court in tax collection, audit and tax litigation matters. Mr. Nath's book, "The Unofficial Guide to Dealing with the IRS" (Macmillan), was first published in 1997. He has been quoted in national media on tax procedure matters and has also appeared on radio and television programs. He has been an editor of professional journals and his articles have appeared in law reviews and other legal periodicals. Mr. Nath is a former U.S. Army Reserve Green Beret officer.
Note: Mr. Nath’s cases normally involved total tax liabilities of $100,000 or more.
Click here to contact Robert G. Nath.

Authors Row Main | Home