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September 15, 2010

I Owe the IRS Taxes… Can I make payments? What if I’m in Bankruptcy?

Filed under: Bankruptcy,Chapter 7 Bankruptcy,Taxes — Barry @ 8:08 am

Your problem is not unusual. Whether you call it an installment agreement, payment agreement, payment option or a payment plan, the idea is the same — you make payments on the taxes you owe. While that may sound like a good idea, you can save money by paying the full amount you owe as quickly as possible to reduce the interest and penalties you will be charged. Those who cannot clear up their tax debts immediately may find that an installment agreement allows for a reasonable payment option. Installment agreements allow the taxpayer to make smaller, more manageable payments while still paying the tax in full.
Under normal circumstances, (i.e., you are not in bankruptcy) you will need to determine whether you owe more than $25,000 including taxes, penalty and interest. If you owe less than that amount you Online Payment Agreement (OPA) or call the number on the bill or notice (have the bill or notice available, along with the social security number). A fill-in Request for Installment Agreement, Form 9465 (PDF), is also available online and can be mailed to the address on the bill.
If you owe more than $25,000 you will need to file a Collection Information Statement, Form 433F with the IRS. If you are in this situation you may wish to speak to a professional.
If you are in bankruptcy you need to communicate with the IRS. You should not file the Form 9465, but should contact the IRS at 1-800-829-1040 to obtain the phone number for your local bankruptcy insolvency unit. You may also want to consider filing an Offer in Compromise. (More on offers in compromise will be covered in another post.) Again, if you are in bankruptcy and cannot pay your taxes, you need to communicate with the IRS or have your attorney do this for you.

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