Can You Have 2 Payment Plans with the IRS?

Can You Have 2 Payment Plans with the IRS?

• Sep 01, 2022

When you fall behind on your taxes, the IRS may be able to provide you with a payment plan to help you get caught up on your tax debts. But what happens if you incur a new tax debt while you’re under a payment plan? Is it possible to get a second payment plan? How will your new debt impact your previous tax debt? Keep reading to find out more about settling multiple tax debts with the IRS.

Falling Behind on New Tax Liabilities

First and foremost, it’s important to know that part of your existing payment plan requires you to continue filing and paying your taxes every year on time. If you fail to pay the taxes you owe before the tax deadline, your existing payment plan could be forfeit, and you’ll find yourself once again facing collection actions and other repercussions of unpaid tax debt.

For this reason, it’s incredibly important that you contact the IRS as soon as you know you will be unable to pay your taxes; this means reaching out before the tax deadline. As soon as your taxes are late, you’ve failed to uphold your payment plan. Those who are on existing IRS payment plans should complete their tax returns early so they know what they owe and can take any necessary actions to deal with that tax debt without losing their settlement plan.

If You Can’t Pay Your New Tax Debt

So what happens if you’re already on a payment plan, you prepare this year’s tax return, and know immediately that you won’t be able to pay what you owe? Is your existing payment plan just lost to you now? Or is there another option, like a second tax settlement plan? While you can’t technically set up a second payment plan with the IRS, the good news is that you can amend your existing agreement to include the additional debt.

Again, if you want to amend your agreement to consolidate both your past and present tax debts, you must act quickly. You can request an amendment by calling the IRS, visiting a local office, or submitting Form 9465. This form will request information about both the original agreement balance and the expected new balance for your amended agreement.

The easiest option is to amend your installment agreement using the IRS online payment agreement tool. This tool allows you to revise the type of plan you’re only, the due date for your monthly payments, and the monthly payment amount. Of course, all of these changes must be approved by the IRS. One of these actions must be taken before the due date of your new tax debt.

If You Can’t Afford Your New Monthly Payments

So, you’ve been approved for a revised payment plan that consolidates your tax debts. But the monthly payment amount is much higher than you can reasonably afford. What now? If you’re not able to make the minimum monthly payment on your amended plan, you’ll need to file Form 433-F, which is a collection information statement.

While not guaranteed, this may qualify you for an offer in compromise, or OIC. An OIC allows you to settle your tax debt for less than what you owe. It’s important to note that qualifying for an OIC is quite difficult, and is generally only available if you can’t make monthly payments while still meeting basic monthly living expenses. Additionally, an OIC does require you to pay the full offered amount upfront, so you will need to have access to sufficient liquid assets to pay whatever amount you offer to the IRS.

Form 433-F may also allow you to qualify for a partial payment installment agreement or non-streamlined installment agreement. These payment plans can make monthly payment amounts more manageable by allowing you to extend your payment plan over a longer period of time or requesting a certain monthly payment amount.

Get Help Consolidating Your Debts

If you know you won’t be able to afford your next tax bill, and you’re already on an IRS payment plan, contact the IRS Advocates today. We’ll help you work with the IRS to amend your tax settlement plan and consolidate your tax debts into one manageable monthly payment; or, we can help you work through requesting an OIC or other type of payment plan that might better fit your financial situation. Just remember to act quickly, so we can ensure your request for an amendment is submitted before your taxes are due and keep your existing payment plan intact!