IRS Payment Plans: When Not to Use Form 9465

When your client needs a payment plan to pay off their tax liability, you may automatically turn to Form 9465. But there are specific circumstances when Form 9465 isn’t the answer – here are tips to help you understand those instances. 

What is Form 9465 and when should you use it? 

Form 9465 allows your clients to request a monthly payment plan with the IRS when they can’t pay their tax liability in full. It’s appropriate to use for individual clients who are in the following situations: 

  • They owe income tax on Form 1040 or 1040-SR  
  • They are or may be responsible for a Trust Fund Recovery Penalty, 
  • They owe employment or unemployment taxes related to a sole proprietor business that is no longer in operation 
  • They owe an individual shared responsibility payment under the Affordable Care Act 

When NOT to use Form 9465 

Even in some of the situations above, you have easier, less costly options for requesting a payment plan. However, there are other cases when Form 9465 can’t be used at all.  

Your client owes less than $50,000 

If your client owes less than $50,000 (including fees, interest, penalties, and taxes owed from prior years), Form 9465 may not be your best option. Your clients can simplify the application process and save on processing fees by applying online. Refer them to the Online Payment Agreement portal at to request an installment agreement.  

Your client can pay in full within 120 days 

The sooner your client can pay their tax liability, the less they’ll owe in penalties and interest. If they can pay their liability within 120 days after their return is filed, they’ll avoid the additional fee of setting up an installment agreement. Again, you’ll use the Online Payment Agreement portal to set up this payment plan. 

Even if your client doesn’t have cash on hand to pay the balance, encourage them to consider options such as borrowing from a retirement account, getting a bank loan, or using available credit. In many cases, the interest they incur from these options will still be less than the interest and penalties they would incur from the IRS. 

Your client’s business is still operating and owes employment or unemployment taxes 

If your client has a sole proprietorship that is still in operation and owes employment or unemployment taxes, don’t use  Form 9465. In this case, the IRS instructs them to “call the telephone number on your most recent notice to request an installment agreement.”  

Your client is in bankruptcy or the IRS has accepted their Offer in Compromise 

If your client has recently declared bankruptcy, the IRS instructs them to call 800-829-1040. From there, they’ll get the number of their local IRS insolvency function for bankruptcy. If your client has made an Offer in Compromise to settle a large tax debt, and this offer has been accepted by the IRS, they’ll call the same number to be directed to Technical Support for Offer in Compromises. 

Make sure you have appropriate representation rights 

Before you help a client set up a payment plan, it’s critical to know the limits of your representation rights as a tax professional. Enrolled Agents, CPAs, and attorneys have unlimited representation rights, including the right to “represent their clients on any matters including audits, payment/collection issues, and appeals.” If you fall into one of these three categories, you can help your clients request installment plans online or call on their behalf. 

Other tax professionals, such as Annual Filing Season Program participants, have limited representation rights for clients. However, the IRS specifies that they “cannot represent clients regarding appeals or collection issues even if they did prepare the return in question.” If you fall into this category, you can advise your clients to request an installment plan on their own, but you cannot perform these actions on their behalf.  

Even if you can’t represent your client as they apply for an installment agreement, you can help them know their options by passing on information from our guide to Helping Your Tax Clients Settle Their Debts with the IRS