- 1). Calculate the exact amount you owe. Don't forget to include any late fees and interest.
- 2). Use IRS Forms 655 and 433-A to calculate how much you can afford to pay each month. You can find the forms on the IRS website. Don't just guess the amount. The IRS will want to see the calculations.
- 3). Submit the forms to the IRS, along with any requested documentation. You can find the address of your local office on their bills. Alternatively, you can find it at www.irs.gov/localcontacts/index.html.
- 4). Keep copies of everything you send to the IRS. That way you'll have proof in case things go missing.
- 5). Wait for the IRS to reply to you. They will either accept your proposed repayment plan or they'll come up with another one. If you don't agree with their proposal, you will have to demonstrate why your initial calculations were correct. This could mean things like proving that your house is worth less than what the IRS estimated or that your projected income is lower than they say.
- 6). Stick to the finalized payment plan. If you fail to make the payments, the IRS will be less likely to negotiate with you a second time.
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