Time and ways to pay

If the amount is under $25K and will be paid off within 5 years, just file an installment agreement request (form 9465?). Requests with those conditions are practically rubber-stamp approved.

The installment can only be done once every five years according to the IRS. Is this true?

So, if I did it 2 years ago. I'm not allowed to do it for 2010.

No. You can apply. However, because you had an IPA within 5 years, the IRS can deny your request for a new one. My experience has been that they never deny the request ($10K or under) as long as you were timely on paying the former IPA and current on tax filing. In addition, they never deny the request to adjust a current IPA upward as long as you have been timely on payments and filing.

I DISAGREE with Removeps-groups' response. An extension is for time to file NOT time to pay. Extensions filed for this purpose can, and more frequently now, are being voided so that you wind up with other penalties - like failure to file. Plus you're still on the hook for failure to pay, underpayment of estimated tax, late payment and late filing penalties. The sum of which can easily exceed any anticipated benefit.

If you need just 4 or 5 months to pay FILE the return and send them as much as you can. They will bill you for the difference, but it will take several weeks for that bill to go out. Before you get that bill make your second payment - now you're down to two. Then when you get the bill CALL the IRS and tell them the bill is wrong because you've already made another payment. In all likelihood the nice person on the phone will listen to you and give you 30-90 days to pay the balance before requiring you enter into a formal installment agreement. This should buy you enough time to make the payments over 4 to 5 months in total.

BUT DO NOT try this if you need more time. It will not ingratiate you with the IRS if they feel you're lying or trying to manipulate them. If you need more time just apply for the IA on Form 9465. In 30 years I have NEVER seen an IA request, that met the parameters in place at the time for amount due and time to pay, denied. Though there is anecdotal evidence to suggest that the IRS has, and does, deny requests for known tax protestors (oops, I forgot we're not supposed to call them tax protestors anymore. What are we to call them?).

Good luck, Gene E. Utterback, EA, RFC, ABA