Understanding the IRS Installment Agreement Letter
Why Sending a Letter Matters
When you owe the IRS more than you can pay by the deadline, your first instinct might be to panic. However, the IRS prefers that taxpayers communicate their inability to pay rather than ignore the debt. Sending a formal letter, often referred to as an IRS Installment Agreement Letter Sample, is a proactive step. This shows the IRS that you are taking responsibility for your tax obligation and are seeking a structured way to resolve it.What to Include in Your Letter
A well-written letter is key to a successful application. You'll need to provide specific information to the IRS so they can process your request. Here's a breakdown of essential components:- Your full name and address
- Your Social Security number (SSN) or Employer Identification Number (EIN)
- The tax year(s) and tax form(s) for which you owe the debt
- The total amount of tax you owe
- Your proposed monthly payment amount
- The date you can realistically start making payments
- A brief explanation of why you cannot pay the full amount at once
The Benefits of an Installment Agreement
Securing an installment agreement offers significant advantages. It helps you avoid more severe collection actions, such as levies or liens, as long as you stick to the payment plan. It also allows you to manage your finances more predictably, knowing exactly how much you need to set aside each month.| Benefit | Description |
|---|---|
| Avoid Penalties & Interest | While interest and penalties still apply, they are often reduced compared to not paying at all. |
| Manageable Payments | Breaks down a large debt into smaller, more affordable monthly installments. |
| Prevent Further Action | Keeps the IRS from taking more aggressive collection measures. |
Requesting a Short-Term Payment Plan
Letter Example: Requesting a Short-Term Payment Plan
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Request for Short-Term Payment Plan - Tax Year [Year] - SSN: [Your SSN]
Dear Sir or Madam,
I am writing to request a short-term payment plan for my outstanding tax liability for the tax year [Year], totaling $[Total Amount Owed]. I am unable to pay this amount in full by the due date.
I am requesting to pay the full balance by [Date - typically within 180 days]. I propose to make a payment of $[Proposed Payment Amount] on [Date of First Payment], and subsequent payments of the same amount on the [Day] of each month until the balance is paid in full.
I am currently experiencing [briefly explain hardship, e.g., temporary job loss, unexpected medical expenses] which has made it impossible to pay the full amount at this time. I am actively working to resolve this situation and will be able to meet this payment schedule.
Thank you for your consideration of my request.
Sincerely,
[Your Signature]
[Your Typed Name]
Requesting a Formal Installment Agreement
Letter Example: Requesting a Formal Installment Agreement
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Request for Installment Agreement - Tax Years [Year(s)] - SSN: [Your SSN]
Dear Sir or Madam,
This letter is to formally request an installment agreement to pay my outstanding tax liability for the tax years [Year(s)]. The total amount owed is $[Total Amount Owed]. I am unable to pay this debt in full by the deadline.
I am requesting a payment plan of up to [Number] months to resolve this debt. I propose to make monthly payments of $[Proposed Monthly Payment Amount], beginning on [Date of First Payment]. I have attached a copy of my most recent tax return and a list of my monthly income and expenses to support this request.
I am currently employed at [Your Employer Name] and my income is $[Your Monthly Income]. My essential monthly expenses total approximately $[Your Monthly Expenses]. Due to [briefly explain hardship, e.g., ongoing medical bills, reduced work hours], I am unable to afford a larger monthly payment at this time.
I am committed to fulfilling my tax obligations and believe this installment agreement will allow me to do so responsibly.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Letter for Past Due Balance
Letter Example: Request for Installment Agreement for Past Due Balance
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Installment Agreement Request for Past Due Balance - Tax Year [Year] - SSN: [Your SSN]
Dear Sir or Madam,
I am writing to request an installment agreement to resolve a past due balance for the tax year [Year]. The amount owed is $[Total Amount Owed]. I am unable to pay this sum immediately.
I would like to establish a monthly payment plan over [Number] months. I propose to pay $[Proposed Monthly Payment Amount] each month, with the first payment due on [Date of First Payment]. I have reviewed my current financial situation and believe this payment amount is manageable.
I have been experiencing [briefly explain hardship, e.g., a recent reduction in income, unforeseen family expenses] which has temporarily impacted my ability to pay this tax liability in full. I am confident that with this payment plan, I can clear this debt.
I appreciate your understanding and assistance in setting up this agreement.
Sincerely,
[Your Signature]
[Your Typed Name]
Letter Requesting Modification of Existing Agreement
Letter Example: Requesting Modification of an Existing Installment Agreement
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Request to Modify Installment Agreement - Agreement Number: [Your Agreement Number] - SSN: [Your SSN]
Dear Sir or Madam,
I am writing to request a modification to my current IRS installment agreement, Agreement Number [Your Agreement Number], due to a change in my financial circumstances.
Unfortunately, I have experienced [briefly explain the change in circumstances, e.g., a significant decrease in income due to job loss, unexpected medical expenses] which has made my current monthly payment of $[Current Monthly Payment Amount] no longer affordable.
I would like to request a reduction in my monthly payment to $[Proposed New Monthly Payment Amount]. I believe this adjusted payment amount will allow me to continue making timely payments while better managing my current financial situation. I have attached updated financial information, including [mention any attached documents, e.g., recent pay stubs, bank statements], to support this request.
I am committed to fulfilling my tax obligations and have consistently made payments on time prior to this change. I hope you can approve this modification.
Thank you for your consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Letter Addressing a Lien or Levy
Letter Example: Letter to Resolve Lien/Levy by Proposing an Installment Agreement
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Resolution of Lien/Levy through Installment Agreement - Tax Year [Year] - SSN: [Your SSN]
Dear Sir or Madam,
I am writing in response to the [Lien/Levy] filed against me for an outstanding tax liability for the tax year [Year], totaling $[Total Amount Owed]. I understand the seriousness of this situation and wish to resolve it promptly.
I am unable to pay the full amount at this time but would like to propose an installment agreement to address this debt. I am requesting a payment plan of [Number] months, with monthly payments of $[Proposed Monthly Payment Amount], beginning on [Date of First Payment].
I have experienced [briefly explain hardship] which has led to my current inability to pay the full balance. I am committed to working with the IRS to resolve this matter and would prefer to do so through a structured payment plan rather than further collection actions.
I am also requesting that the [Lien/Levy] be released or withdrawn upon the establishment and adherence to this installment agreement.
Thank you for your attention to this urgent matter.
Sincerely,
[Your Signature]
[Your Typed Name]
Letter to Waive Penalties
Letter Example: Request to Waive Penalties with Installment Agreement
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Request to Waive Penalties and Establish Installment Agreement - Tax Year [Year] - SSN: [Your SSN]
Dear Sir or Madam,
I am writing to request an installment agreement to pay my outstanding tax liability for the tax year [Year], totaling $[Total Amount Owed]. I am also requesting the waiver of associated penalties.
I have experienced a significant period of [briefly explain hardship, e.g., severe illness, natural disaster, honest mistake due to complexity of tax law] which unfortunately led to my failure to pay the tax liability by the due date and the imposition of penalties. I have since taken steps to rectify the situation and am now prepared to enter into a payment plan.
I propose to make monthly payments of $[Proposed Monthly Payment Amount] for [Number] months, starting on [Date of First Payment]. I understand that interest will continue to accrue, but I kindly request that the penalties be waived due to the extenuating circumstances. I have attached supporting documentation, such as [mention any attached documents, e.g., doctor's notes, disaster relief information], to substantiate my request.
I am committed to meeting my tax obligations and believe that waiving the penalties, in conjunction with an installment agreement, would be a fair resolution.
Thank you for your understanding and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]
Letter Regarding Unfiled Returns
Letter Example: Request for Installment Agreement After Filing Unfiled Returns
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Your Phone Number]
[Your Email Address]
[Date]
Internal Revenue Service
[Address for Taxpayer Service Centers - check IRS.gov for the correct address]
Subject: Installment Agreement Request Following Filing of Unfiled Returns - Tax Years [Year(s)] - SSN: [Your SSN]
Dear Sir or Madam,
I am writing to request an installment agreement to resolve the tax liability resulting from my recently filed unfiled tax returns for the years [Year(s)]. The total amount owed, as calculated on these returns, is $[Total Amount Owed].
I acknowledge my responsibility to pay these taxes and am seeking an installment agreement as I am currently unable to pay the full balance. I propose to pay $[Proposed Monthly Payment Amount] per month for [Number] months, with the first payment due on [Date of First Payment].
I experienced [briefly explain the reason for not filing, e.g., a period of significant personal hardship, confusion regarding tax obligations] which prevented me from filing these returns on time. I have now filed the necessary returns and am committed to resolving this tax debt.
I believe this installment agreement will allow me to fulfill my obligations responsibly.
Thank you for your time and consideration.
Sincerely,
[Your Signature]
[Your Typed Name]