Expert Tax Representation is Essential
If a taxpayer isn’t able to pay their federal tax assessment all at once, they may be able to enter into an IRS installment agreement with the IRS. An installment agreement is an agreement to pay taxes over a certain period of time.
The IRS will also assess interest and penalties related to the debt. Although some of the interest and penalties may be waived in some circumstances.
How Can You Qualify For An IRS Installment Agreement?
In order to qualify for an IRS installment agreement, you will first need to be completely current on your returns. This means that you will have to have filed all of your prior year returns. Even if you haven’t been able to pay them. If you haven’t filed your returns, you should file them now.
How Does An IRS Installment Agreement Work?
How an agreement needs to be paid is usually based on the amount of debt that is owed.
- If the balance is over $100,000, the IRS will review the taxpayer’s current financial situation. Then, determine the amount that they can pay. From there, they will determine the amount of time the taxpayer will have to pay off the debt.
- If the balance is between $0 and $100,000, the IRS will offer a payment plan of 72 months. But, will not usually require any detailed financial information.
How Much Does An Installment Agreement Cost?
An IRS installment agreement has some related fees. In addition to the interest and penalties that have already accrued, the debt will continue to accrue interest costs while it is due. Although the amount of interest charged will go down as the principle of the debt is paid.
The IRS will charge a fee for a payment plan and there are additional options for lower income taxpayers.
How Long Will An IRS Payment Plan Last?
An IRS installment agreement can be negotiated to last any time period. From a few months to as long as six years. When a payment plan is initially proposed, a taxpayer should go over their finances to determine how quickly they should be able to pay back their debt. Ideally, paying back the debt as soon as possible is preferred.
If the debt cannot be paid back within six years — or if the monthly payments would be too high — the taxpayer can consult with their tax professional to explore other options to settle their debt.
How Is An IRS Installment Plan Paid?
Once the IRS installment plan is accepted, it will be automatically deducted from a bank account under a direct debit installment agreement. This ensures that the IRS will be paid on time. If a direct debit installment agreement is not required, the taxpayer can mail in a check each month or make an online payment via the IRS website
Could The IRS Refuse An Installment Plan?
The IRS accepts many payment plans, but it can reject it for a few reasons. The IRS may believe that you are fully capable of paying your tax debt; if you have a significant amount of income compared to your expenses, the IRS may ask that you pay your debts immediately. The IRS may also refuse a payment plan if it is believed that the documents you sent in are not entirely truthful; you may be considered to be hiding assets or cash. Installment agreements can also be refused if you have defaulted previously on another IRS installment agreement.
Could An IRS Installment Agreement Be Revoked?
Once an IRS installment agreement has been made, the taxpayer has to ensure that their payments go through on time until the entire debt has been paid off. An installment agreement may be revoked for the following reasons:
- The data that you initially provided to the IRS may have been missing or incomplete. This is why it’s absolutely critical that a taxpayer make sure that they disclose all of their assets and income. And, that they are correct about the amount of debt they owe.
- Your financial situation has changed. If you start making dramatically more money, the IRS may recall your debts. The IRS may request a review of your financial situation every 12 to 24 months.
- Subsequent tax returns are not filed or paid. To stay on an IRS installment agreement, an individual has to keep paying their new debt as well as their old debt. And, file future tax returns on time.
- A payment is missed. If payments are missed, the payment plan is generally revoked. However, you may have up to one or two months to initiate payments again.
Negotiating an IRS installment agreement can be complex. Those who owe a lot in taxes may want to consult with a tax resolution professional first, such as Peace Of Mind Tax Help.
Critical Tax Resolution Representation
Peace Of Mind Tax Help provides taxpayers the critical tax representation needed in dealing with the IRS and state tax agencies. Not only do we provide an immediate buffer in communication, we have the needed knowledge and skills to properly fix and resolve many problems that go sideways due to unawareness of tax code nuances. Peace Of Mind Tax Help can help support taxpayers in getting into a payment plan. Again, a taxpayer can go it alone with the IRS. But, there’s no reason to take on that kind of risk unnecessarily. It can be handled with the expert help and professionalism with Peace Of Mind Tax Help at your side.
At Peace Of Mind Tax Help, we put our clients first, providing them with superior tax resolution services for a reasonable fee.
If you are ready to hire a qualified tax representative, contact Peace Of Mind Tax Help today to get help in requesting an IRS installment agreement!