The Basics of Business Tax Payment PlansPublished:
Filling out a tax payment plan for your business is much the same as filing for one as an individual. Basically, the IRS only cares how much you owe. For once, in the government’s eyes, it doesn’t really matter if you’re a business or a person.
Before you begin filing a tax payment plan for your business, figure out how much you owe on your taxes. This will determine not only what form to fill out but how easy a time you will have with the tax payment plan process.
If you owe more than $25,000 than you must fill out not only the IRS Form 9465 but also the 433-F. If you owe less than $25,000 you need only fill out the 9465 Form to set up your tax payment plan.
The main point to remember about setting up a tax payment plan for your business is that you acquire interest at a rate of at least 5%. This means if you owe $10,000 in taxes, in total you will owe around $11,000 after interest.
The idea on the forms is to report to the IRS how much you can pay each month. You want to try and pay as much as possible to avoid further interest or fees. In fact, if you can pay your taxes within 120 days, you shouldn’t use the tax payment plan system at all! Just pay it back as quickly as you can and you owe nothing more.
If you must use a payment plan, don’t tell the IRS you can pay more than you actually can. If you start to slip on payments, the punishments will often be more serious than just more interest. More penalties can accrue, or legal action could even result. Also, the IRS makes it particularly difficult to change your plan when it’s all set up. Just be honest and pay as much as you can. You can always pay off your installment agreement early if you run into a windfall.