Form 9465 Installment Agreement Request (2020): Complete Guide

What Form 9465 Is For

Form 9465 is the IRS's official request form for setting up a monthly payment plan when you can't pay your full tax bill in one lump sum. Think of it as asking the IRS for permission to pay your tax debt in installments, similar to how you might pay off a car loan or credit card balance over time. The form allows you to propose a monthly payment amount and payment method that works with your budget, rather than being forced to pay everything immediately.

This form is used by individual taxpayers who owe income tax, employment taxes from a sole proprietorship that's no longer operating, or the individual shared responsibility payment under the Affordable Care Act (though this payment wasn't assessed for months after December 31, 2018). The IRS designed Form 9465 to make tax debt more manageable for people experiencing financial difficulty, allowing up to 72 months to pay under streamlined agreements.

It's important to know that you may not even need to file Form 9465 at all. If you owe $50,000 or less, you can apply for an installment agreement online through the IRS's Online Payment Agreement application at IRS.gov/OPA, which comes with lower setup fees. Similarly, if you can pay your full balance within 120 days, you can arrange a short-term payment plan without filing this form or paying any setup fee.

When You’d Use Form 9465

Late/Amended Returns

You would file Form 9465 when you've filed your 2020 tax return (whether on time, late, or amended) and discover you cannot pay the full amount due. You can attach Form 9465 to the front of your original tax return if you know beforehand that you'll need a payment plan. However, most people file it separately after receiving a bill from the IRS or after filing their return.

For late or amended 2020 returns, you would file Form 9465 by itself with the appropriate IRS Service Center. The form is also appropriate when you receive an IRS notice showing a balance due—perhaps from an audit adjustment, amended return, or additional taxes assessed. You don't wait for collection action to begin; you can proactively request an installment agreement as soon as you realize you cannot pay in full.

The 2020 tax year had special considerations due to COVID-19. Under the IRS's "People First Initiative," taxpayers with existing installment agreements had their payments suspended between April 1 and July 15, 2020. If you were setting up a new agreement during this period, the IRS offered additional flexibility to taxpayers experiencing pandemic-related hardships.

You should NOT use Form 9465 if your business is still operating and owes employment or unemployment taxes (call the IRS instead), if you're currently in bankruptcy, or if the IRS has accepted your offer-in-compromise. Additionally, if you haven't filed all required tax returns, your installment agreement request will be denied—the IRS requires compliance with all filing obligations first.

Key Rules or Details for 2020

$50,000 Streamlined Threshold

For the 2020 tax year, several important rules governed Form 9465 installment agreements. The $50,000 threshold was crucial: if you owed this amount or less (including debts from prior years), you qualified for streamlined processing without needing to complete the detailed financial statement Form 433-F. This streamlined approach allowed for agreements up to 72 months with minimal documentation.

Guaranteed Installment Agreement

The guaranteed installment agreement was available if you owed $10,000 or less, had timely filed and paid all taxes for the past five years, hadn't previously entered into an installment agreement for income tax, and agreed to pay within three years while staying current on future tax obligations. If you qualified, the IRS had to approve your request.

User Fees and Low-Income Provisions

User fees varied significantly based on how you applied and how you paid. Applying online through the OPA system cost $31 with direct debit or $149 for other payment methods. Filing Form 9465 by mail cost $107 with direct debit or $225 without. However, low-income taxpayers—those with adjusted gross income at or below 250% of federal poverty guidelines—could have fees waived entirely if they agreed to direct debit, or reimbursed upon completion of the agreement if they couldn't use direct debit.

2020 COVID-19 Relief

2020 COVID-19 provisions provided temporary relief. Existing installment agreement payments due between April 1 and July 15, 2020, were suspended under the People First Initiative. The IRS also offered more flexibility in approving new payment plans for taxpayers experiencing pandemic-related financial hardship during this period.

Interest, Penalties, and Refund Offsets

Interest and penalties continued to accrue on unpaid balances even after entering into an installment agreement, though establishing a payment plan helped avoid more aggressive collection actions like liens or levies. The IRS also could apply any future tax refunds to your outstanding balance while the agreement remained active.

Step-by-Step (High Level)

Step 1: Gather Your Information

Before starting, have your tax return(s) or IRS notice(s) showing the amount you owe, your Social Security Number, current address, and banking information if you plan to use direct debit. Calculate the total amount you owe from all sources.

Step 2: Decide Your Payment Method

Determine whether you can use direct debit from your checking account (which qualifies for lower fees) or if you'll pay by check, money order, or card each month. Direct debit is strongly recommended—it ensures timely payments, qualifies for lower fees, and for low-income taxpayers, may result in fee waivers.

Step 3: Calculate Your Monthly Payment

Divide your total balance by 72 months to find the minimum the IRS expects. Propose a monthly payment you can realistically afford—making it as large as possible to limit interest and penalty charges. If you owe more than $25,000 but not more than $50,000, you must either agree to direct debit payments or provide detailed financial information on Form 433-F.

Step 4: Complete Part I of Form 9465

Fill in your personal information, the tax form and year(s) involved, total amount owed, any payment you're making with the request, and your proposed monthly payment amount. Choose which day of the month (1st through 28th) you want payments due—many people choose a date shortly after payday. If using direct debit, complete lines 13a and 13b with your bank routing and account numbers.

Step 5: Complete Part II if Required

Only fill out Part II if you defaulted on an installment agreement in the past 12 months, owe more than $25,000 but not more than $50,000, and your proposed payment is less than the amount shown by dividing your balance by 72 months. This section collects basic financial information about your household, income, expenses, and assets.

Step 6: Sign and Submit

Both spouses must sign if filing a joint return. Attach Form 9465 to the front of your 2020 tax return if filing together, or mail it separately to the appropriate IRS Service Center address shown in the instructions (addresses vary by state and whether you're including Schedules C, E, or F). Include any payment you can make with your request.

Common Mistakes and How to Avoid Them

Mistake #1: Not filing all required tax returns first.

The IRS will automatically deny your installment agreement request if you haven't filed all required returns. Before requesting a payment plan, ensure you've filed returns for all years, even if you couldn't pay the tax due. Filing shows good faith and compliance.

Mistake #2: Proposing an unrealistically low monthly payment.

If you owe more than $25,000, proposing a payment significantly below your balance divided by 72 months may require you to complete the burdensome Form 433-F financial statement. Be realistic about what you can afford, but understand that very low payments may face additional scrutiny or denial.

Mistake #3: Choosing the wrong payment method.

Many taxpayers pay by check monthly, incurring the highest setup fees ($225 if filing by mail) and risking late payments that could default the agreement. Instead, use direct debit to save money ($107 by mail, $31 online) and ensure timely payments. Low-income taxpayers using direct debit can have fees entirely waived.

Mistake #4: Failing to make payments with direct debit.

If you complete lines 13a and 13b for direct debit but don't sign the form, the direct debit won't be approved. Both spouses must sign if filing jointly. Also, verify your routing and account numbers are correct—errors will prevent automatic payments and could cause default.

Mistake #5: Not making future tax payments.

The installment agreement requires you to stay current on all future tax obligations. Many taxpayers focus only on their payment plan and forget to adjust their withholding or make estimated tax payments for the current year. Owing additional taxes while on a payment plan can result in default of the agreement.

Mistake #6: Applying by mail when you could apply online.

If you owe $50,000 or less, applying online at IRS.gov/OPA instead of filing Form 9465 can save you substantial money on setup fees and provide faster approval. The online application is user-friendly and available 24/7.

Mistake #7: Missing the payment due date you selected.

When you choose your monthly payment date (line 12), make sure it's realistic for your pay schedule. If you're paid on the 15th, don't choose the 10th as your payment date. Give yourself a cushion to ensure funds are available when the IRS debits your account or when you need to mail a check.

What Happens After You File

IRS Response Timeline and Approval/Denial

Once the IRS receives your Form 9465, they typically respond within 30 days, though it may take longer if you filed your return after March 31 (during peak filing season). The IRS will send you a notice stating whether your installment agreement request was approved or denied. If approved, the notice will detail the terms of your agreement, confirm your monthly payment amount and due date, and request payment of the user fee.

Direct Debit Handling

If you set up direct debit, the IRS will automatically withdraw your payment from your checking account on the specified date each month. You won't receive monthly notices—your bank statement serves as your payment record. However, you will receive an annual statement showing your beginning balance, all payments made during the year, and your ending balance.

Paying by Check or Other Methods

If you chose to pay by check, money order, or other methods, you'll receive a monthly notice showing the remaining amount you owe and the due date and amount of your next payment. Make sure to include your Social Security Number, the tax year, and form type when sending payments to ensure proper crediting.

Interest, Penalties, and Refund Offsets

While your installment agreement is active, interest and late payment penalties continue to accrue on the unpaid balance until it's paid in full. The IRS will also apply any future tax refunds against your balance, so don't expect refunds while you're paying off tax debt. You're still required to make your regular monthly installment payment even if a refund is applied.

Notice of Federal Tax Lien (NFTL)

The IRS may file a Notice of Federal Tax Lien (NFTL) to protect its interest in your assets, though liens generally aren't filed with guaranteed or streamlined agreements under $50,000. An NFTL is a public notice that you owe taxes and can affect your credit rating and ability to sell property. However, the IRS won't file a lien for individual shared responsibility payments under the Affordable Care Act.

Defaults, Termination, and Appeals

If you don't make payments on time or file a subsequent return with a balance due, you'll be in default and the IRS may terminate your agreement. Before termination, you're entitled to appeal through the Collection Appeals Program (CAP). After termination, the IRS can take enforcement actions like levies on your bank accounts or wages. If you know you'll miss a payment, contact the IRS immediately—they may be able to modify your agreement.

Modifying or Terminating the Agreement

To modify or terminate your installment agreement later, visit IRS.gov/OPA or call 800-829-1040. You can change your payment amount or due date. Modifications generally cost $89 ($43 for low-income taxpayers), though restructuring or reinstating through the online system costs only $10. If the IRS requests updated financial information during the life of your agreement, you must provide it promptly—failure to do so can result in termination.

FAQs

Can I still file Form 9465 if I haven't filed my 2020 tax return yet?

If I'm approved for an installment agreement, can the IRS still take collection action against me?

What happens if I can't afford the monthly payment amount the IRS proposes?

Can I pay off my installment agreement early without penalty?

Will an installment agreement affect my credit score?

What if my financial situation improves or worsens during my payment plan?

Can I set up an installment agreement for multiple tax years at once?

Sources

• IRS Form 9465 (Rev. September 2020)
• Instructions for Form 9465 (Rev. October 2020)
• About Form 9465, Installment Agreement Request
• Installment Agreements/Payment Plans - People First Initiative FAQs
• Topic No. 202, Tax Payment Options

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