IRS Installment Agreement asking for way more than Balance/72 monthly payment - what's going on?
I've been helping my brother sort through several years of tax issues he's been avoiding. We've made progress - all returns are now filed, we managed to get a first time abatement, and we're down to a remaining balance of about $71k. When we contacted the IRS about setting up an Installment Agreement, we completed the form 433-F and proposed a monthly payment of $1,100. I thought this was reasonable since it's more than the balance divided by 72 months. To my surprise, the IRS representative said he needs to pay $1,850 monthly! They said if we want to pay less than that amount, we need to substantiate all his monthly expenses with documentation. The problem is that he shares expenses with his roommate, so we don't have bank statements that clearly show just his portion of living costs. I'm confused - why is the IRS demanding so much more than what I calculated would be the minimum monthly payment? Isn't there a standard formula they're supposed to follow based on the total balance? What are our options here if we can't produce the exact documentation they want?
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Eve Freeman
The IRS doesn't just use a simple Balance/72 formula when determining installment agreement payments. What they're doing is using the information from Form 433-F to calculate your brother's "ability to pay" based on income minus allowable expenses. The IRS has predetermined allowable expense amounts for various categories like housing, transportation, and food based on location and family size. If your brother's claimed expenses exceed these standards, they'll want documentation to support the higher amounts. Otherwise, they default to their standard allowances, which often results in a higher calculated "ability to pay." For a $71k debt, they're looking to recover it faster than 72 months if possible. Their financial analysis basically showed your brother can afford $1,850 monthly based on their calculations of his income minus their allowable expense amounts.
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Val Rossi
•Thanks for explaining. I had no idea they weren't using the balance/72 formula. So even though I thought $1,100 was reasonable, they're basically saying his disposable income is higher based on their standards? Is there any way to negotiate this down without having the perfect documentation?
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Eve Freeman
•Yes, that's exactly right - they've calculated his disposable income as higher based on their standards. You have a few options without perfect documentation. First, you could estimate reasonable amounts for his share of expenses and provide whatever partial documentation you have, along with a written explanation of the shared living situation. Second, you could request a lower payment based on "special circumstances" if there are unique financial hardships. Third, consider a partial payment installment agreement (PPIA) which might offer lower payments but requires more financial disclosure.
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Clarissa Flair
Just went through this exact nightmare with my tax situation. I was pulling my hair out dealing with the IRS until I found this AI tool that helped me understand exactly what documentation I needed and how to properly fill out the 433-F. It's called https://taxr.ai and it literally saved me thousands by helping me properly document my expenses so I could get a lower monthly payment. The tool analyzed my situation and showed me exactly what the IRS was looking for - turns out I was missing key documentation for several expenses that were completely legitimate. Once I had everything properly organized and submitted, my payment dropped from $1,400 to $850.
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Caden Turner
•Does this actually work? The IRS was so inflexible with me when I tried to set up a payment plan last year. They wanted almost double what I could afford. How exactly does the tool help with the documentation part?
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McKenzie Shade
•I'm skeptical about using any third-party service for tax issues. Couldn't you just call the IRS and ask them directly what documentation you need? Why pay for something when the information is available for free?
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Clarissa Flair
•It absolutely works! The tool breaks down exactly what documentation the IRS accepts for each expense category. For example, I didn't realize I needed to average my utility bills over 6-12 months instead of just submitting the most recent ones. To answer your second question, you definitely can call the IRS directly, but in my experience, you get different answers depending on who you talk to. The tool gives you consistent, specific guidance based on actual IRS internal guidelines. Plus it saved me hours of research and helped me organize everything in one place. I understand being skeptical, but it was worth it for the peace of mind knowing I wasn't missing anything.
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Caden Turner
I was super skeptical about using any kind of service for my tax problems, but I decided to try that taxr.ai site someone mentioned above when I was desperate with my installment agreement situation. Honestly, it was a game-changer for my situation. I had almost the exact same problem - IRS wanted $1,700/month when I could only afford about $900. The tool helped me understand exactly what documentation I needed for my shared housing expenses and even created a statement explaining my situation that I could submit with my 433-F. The IRS accepted my documentation and approved my lower payment amount! The difference was in the details - I learned how to properly document partial expenses and how to present everything in a way the IRS would accept. Definitely worth checking out if you're in this situation.
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Harmony Love
If you're struggling to get through to a real person at the IRS to discuss your installment agreement options, I highly recommend using Claimyr (https://claimyr.com). I was on hold for HOURS trying to reach someone at the IRS to discuss my installment agreement. With Claimyr, I got through to an actual IRS agent in about 20 minutes instead of waiting for 3+ hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually super helpful once I explained my shared expense situation. They guided me through exactly what documentation would be acceptable for my roommate situation and gave me options I didn't know existed.
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Rudy Cenizo
•How does this actually work? I've been trying to get through to the IRS for weeks about my installment agreement. Do they just hold your place in line somehow?
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McKenzie Shade
•Yeah right. Sounds like a scam to me. How could some random service get you through to the IRS faster than calling directly? The IRS phone system is notoriously backed up, especially during tax season. I'll believe it when I see it.
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Harmony Love
•The service basically uses technology to navigate the IRS phone system and wait on hold for you. When they reach a real person, you get a call connecting you directly to the IRS agent. It's basically like having someone wait on hold for you. As for the skepticism, I completely understand. I was doubtful too until I tried it. The IRS phone system is indeed backed up - that's exactly why this service exists. They don't claim to have any special access to the IRS, they just handle the hold time for you so you're not stuck with your phone for hours. The real value is in not wasting half your day waiting to speak with someone.
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McKenzie Shade
Well, I need to eat my words and apologize. After my skeptical comment above, I was so frustrated with being on hold with the IRS for 2+ hours that I broke down and tried that Claimyr service. I seriously can't believe how well it worked. Got connected to an IRS agent within 25 minutes. The agent was able to review my installment agreement situation and actually found that I qualified for a hardship status that reduced my required monthly payment significantly. All this time I'd been stressing about documentation for my expenses, and it turns out I qualified for a program I didn't even know existed because of my medical situation. Sometimes it really is worth getting through to a real person who can look at your specific circumstances.
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Natalie Khan
One thing nobody has mentioned yet - have you considered submitting an Offer in Compromise instead of an installment agreement? If your brother truly can't afford the monthly payment they're asking for, an OIC might let him settle the debt for less than the full amount. The IRS has a pre-qualifier tool on their website that can help determine if this might be an option: https://irs.treasury.gov/oic_pre_qualifier/
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Val Rossi
•I hadn't thought about that option. Is the OIC process more complicated than setting up an installment agreement? And do they accept a lot of these offers or is it really difficult to qualify?
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Natalie Khan
•An OIC is definitely more complex than a standard installment agreement. You'll need to complete Form 656 and Form 433-A (OIC) with much more detailed financial information. The process typically takes 6-12 months for a decision. As for acceptance rates, they've improved in recent years. The IRS accepts about 40-45% of OICs submitted these days, which is much better than the historical 10-15% acceptance rate from years ago. The key is being realistic about what you offer - they use a formula based on assets, income, and expenses to determine the minimum they'll accept.
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Daryl Bright
Your brother might qualify for Currently Not Collectible (CNC) status if he truly can't afford the payment they're requesting. With CNC, the IRS temporarily stops collection activities because they recognize that paying would create a financial hardship. The debt doesn't go away, and interest/penalties still accrue, but it gives breathing room until his financial situation improves.
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Sienna Gomez
•This is good advice. I was placed in CNC status for 2 years when I had a medical issue that wiped out my savings. The IRS reviewed my case after about 24 months and by then I was able to set up a reasonable installment plan. Without that breathing room I would have been completely underwater.
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