If you can’t pay your taxes and can’t borrow money to do so, an Installment Agreement is the most popular alternative.
Although you do not have an absolute right to an installment agreement, generally they are available.
Before you can get one of these payment plans the I.R.S. will insist on the following minimum conditions:
- That you have filed all income tax returns,
- That you have filed all employment tax returns,
- That you have paid all payroll taxes for the most recent quarter, and,
- That you file a Financial Statement if the amount of tax is over $25,000.
Agreements come in two sizes: more than $50,000 in tax liability, and less than that amount (currently being tested with a $100,000 tax liability limit).
The I.R.S. will grant an automatic Installment Agreement to pay over a maximum of 6 years if you owe less than $50,000.
For an amount over $50,000 the I.R.S. will insist on the completion of a Financial Statement (Form 433A/F).
If you give the I.R.S. a financial statement, that information becomes a road map to your assets in the event they later decide to levy on your assets.