Sample letter to irs for payment plan

The IRS this month will send millions of letters to taxpayers whom it believes underpaid the tax agency. It's important to pay attention to this letter — called a CP14 — because ignoring it could lead to penalties, according to Jackson Hewitt chief tax information officer Mark Steber.

The IRS issues roughly 9 million of these letters annually, Steber said. This year, the letter is unusual given that agency has stopped sending many types of notices and letters due to the pandemic. The IRS in February announced it would halt sending more than 10 types of letters that cover issues such as failure to file a tax return to under-withholding taxes. 

The IRS sends a CP14 if it calculates that a taxpayer has a balance of more than $5 on their account, which can be related to a number of issues, such as failing to report some income or failure to pay a balance in full. The CP14 will tell you how much you owe and request payment within 21 days, according to the Taxpayer Advocate Service, which notes that the letter is one of the most common notices sent to taxpayers. 

"The CP14 is a balance of taxes due notice, and that is why they aren't suspended," Steber said. "It's in the taxpayer's interest to know that they owe money so that those penalties and interest don't progress."

The IRS is required to send CP14 notices within 60 days after the tax agency assesses a tax liability, which means people who filed their taxes leading up to the mid-April tax deadline could get the letters in June.

What happens if I don't pay?

First, if you pay the full amount by the due date printed on the CP14, the IRS says it won't charge you any interest. After that, interest will start accruing on your balance. 

Steber advises taxpayers to read the letter carefully and take steps to address the balance due in order to avoid added costs and trouble.

The IRS charges 0.5% per month on unpaid taxes, up to a maximum of 25% of the total balance due, which can add up. However, if you don't pay the amount due within 60 days, the IRS can move to collect on the balance and even place a lien on your property, such your home or your car.

"The IRS is good at a lot of things, and one of the things they are really good at is ultimately getting their money," Steber said.

What should I do if I can't afford to pay? 

The IRS says it will work with taxpayers to set up a payment plan. The IRS can set that up through an online application.

The IRS says taxpayers dealing with financial hardship can also ask for a temporary delay of collection until they get back on their feet (See the IRS' website for more information on applying for a delay.)

What if I think the CP14 letter is wrong?

Contact the IRS if you believe the notice is incorrect. But be prepared to document your case, such as through records of payment, if you have already paid the tax that the IRS contends it is owed, Steber said. 

The CP14 letter will provide a number for you to contact the IRS, but he noted that the agency has been difficult to reach on the phone. You can also mail the IRS through the contact information that will be included in the letter, along with your documentation. 

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If you can’t afford to pay your taxes, you may be able to qualify for an installment plan with the Internal Revenue Service.

  • An installment plan allows you to pay your taxes over time while avoiding garnishments, levies or other collection actions.
  • You'll still owe penalties and interest for paying your taxes late, but it can help make the payments more affordable.
  • The minimum monthly payment for your plan depends on how much you owe.

Minimum monthly payment

You can apply for an installment agreement online, over the phone, or via various IRS forms.

  • To some degree, you get to choose how much you want to pay every month.
  • The IRS will ask you what you can afford to pay per month, encouraging you to pay as much as possible to reduce your interest and penalties.
  • If you choose not to answer, select too low of an amount, or let the IRS pick a payment amount for you, your minimum payment will typically be set to the amount that you owe divided by 72.

Fees for IRS installment plans

If you can pay off your balance within 180 days, it won't cost you anything to set up an installment plan.

  • If you cannot pay off your balance within 180 days, setting up a direct debit payment plan online will cost $31, or $107 if set up by phone, mail, or in-person using Form 9465.
  • If not using direct debit, then setting up the plan online will cost $130.
  • If not using direct debit, setting up the plan by phone, mail, or in-person will cost $225 using Form 9465.
  • If you're a lower-income taxpayer, you may be able to reduce these fees.

Balance of $10,000 or below

If you owe less than $10,000 to the IRS, your installment plan will generally be automatically approved as a "guaranteed" installment agreement.

  • Under this type of plan, as long as you pledge to pay off your balance within three years, there is no specific minimum payment required.
  • For balances above $10,000, you may have to provide additional information in order to qualify.

Balance between $10,000 and $50,000

With a balance due above $10,000, you can qualify for a streamlined installment plan.

  • While acceptance isn't guaranteed, the IRS doesn't usually require additional financial information to approve these plans.
  • With a streamlined plan, you have 72 months to pay.
  • The minimum payment is equal to your balance due divided by the 72-month maximum period.
  • If you can't pay an amount equal to what you owe divided by 72, you will need to complete Form 433-F unless you qualify for an exception.

Balance over $50,000

Qualifying for a plan with a higher balance due requires additional information.

  • The IRS will want to know about your income and expenses on Form 9465-FS and Form 433-A.
  • On Form 433-A, you'll have to provide detailed information on your investments, assets, income and bank accounts.
  • If you have any meaningful assets, you might have to sell some to pay down your outstanding balance.
  • Your minimum payment in this situation will be unique to the specific agreement you strike with the IRS.


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How do I write a letter asking for installment payment?

Letter Proposing Payments in Installments.
Basic details of the dealer (such as name, address, phone and account number).
Basic details of the buyer (such as name, address, phone and account number).
Date of the request..
Details of request (proposing to pay (or get paid in parts every month).

Will the IRS give me a payment plan?

If you are an individual, you may qualify to apply online if: Long-term payment plan (installment agreement): You owe $50,000 or less in combined tax, penalties and interest, and filed all required returns. Short-term payment plan: You owe less than $100,000 in combined tax, penalties and interest.

What is the best way to send a letter to the IRS?

Use certified mail, return receipt requested, if you send your return by snail mail. It will provide proof that it was received. The IRS accepts deliveries from FedEx, UPS, and DHL Express. But you must use an approved class of service.

How long does it take the IRS to approve a payment plan?

If you mail Form 9465, the IRS will respond to your request typically within 30 days but it may take longer during filing season. Installment agreements by direct debit and payroll deduction enable you to make timely payments automatically and reduce the possibility of default.