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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13127
Experience:  15years with H & R Block. Divisional leader, Instructor
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We have a Private Annuity Trust our financial advisor is

Resolved Question:

We have a "Private Annuity Trust" our financial advisor is closing. It had 2 of our properties in it. Only one property sold, for about $225K and the money was distributed to us the past 5 years. We are told we now face a large one time tax bill $33K because the "PAT" is closing and that money will come out of our retirement accounts. That money will be taxed again we assume.
Is there a payment over time to the IRS or other solutions than taking this large one time hit?
Submitted: 5 years ago.
Category: Tax
Expert:  Robin D. replied 5 years ago.

Hello and thank you for using Just Answer.

You can make monthly payments through an installment agreement if you're not financially able to pay your tax debt immediately. However, you will reduce or eliminate the amount of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full. If you cannot pay the full amount within 120 days, the fee for setting up an agreement is:

  • $52 for a direct debit agreement;
  • $105 for a standard agreement or payroll deduction agreement; or
  • $43 if your income is below a certain level.

If you can pay the entire amount in 120 days then you can avoid the fee.

There are three ways a taxpayer can apply for an installment agreement:

  • Apply online if you owe $25,000 or less in combined individual income tax, penalties and interest;
  • Call the phone number on your bill or notice;
  • Complete and mail Form 9465, Installment Agreement Request. If you owe more than $25,000, you will also need to complete Form 433-F, Collection Information Statement.

If you do owe $33k then applying online will not be an option for you. Since you have not received a notice yet you will need to send the Form 9465 and the Form 433F to request the payment plan. Please understand that the interest on your tax liability will continue to accrue until the entire amount is paid.

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