Tax Installment Agreements

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WHAT IS AN IRS TAX PAYMENT PLAN OR IRS INSTALLMENT AGREEMENT

A IRS tax installment agreement is an efficient and organized way to satisfy your tax debt once all your tax returns have been filed and the final tax liability has been determined.

If you are not financially capable of paying the tax owed in full at this time, then an IRS tax payment plan is the right option for you. In order to qualify for a tax installment agreement, typically you will need to report the amount of income you earn on a monthly basis along with all your monthly expenses. This will allow the IRS, or State Taxing authority, to understand the amount of disposable income you generate per month, which will help determine the monthly payment you can pay to them to pay-off your tax debt. After thoroughly reviewing and discussing your financial accounts and understanding your finances in detail, we will then negotiate on your behalf to obtain an affordable payment plan.

The IRS tax payment plan negotiation is a very detailed process, since the tax authorities have the right to question any part of the documentation submitted. You need a qualified tax law firm to assist you with this process. Negotiation of an Installment Payment Agreement, or IRS Installment Agreement, within the taxpayer’s ability to perform is often difficult, and requires substantial knowledge about IRS rules and regulations. The determination of the minimum monthly installment payment that will be acceptable to the government depends upon the application of specific IRS income and expense standards to the actual facts of the case. These regulations and guidelines include IRS local and national standards for allowable expenses that the IRS Revenue Officers will use to evaluate your installment offer and proposed IRSl tax installment agreement proposal.

THE EFFECT OF A IRS INSTALLMENT AGREEMENT

Once a IRS tax payment plan is established for your back taxes, the IRS will refrain from engaging in enforced collection action against you, including levies against your bank accounts or wages, while the taxpayer remains current with both all future tax filings and the payment obligation that was negotiated for you. Although the IRS will refrain from levy action against bank accounts and wages, or seizing your property, the IRS may file a Federal Tax Lien to secure compliance with the installment payment arrangement depending upon the amount of taxes owed.

If the tax installment agreement is not accepted because they do not believe you are financially capable of making any payment at the current time, then they may delay collection of taxes until you are on a better financial health. Even if you don’t have enough to pay your tax liability, it is crucial that you still file your returns. We can help guide you in this situation, and we will negotiate with the IRS to find the right payment plan for you.

HOW TO KEEP YOUR IRS TAX PAYMENT PLAN IN GOOD STANDING

The following steps should be taken to keep your tax installment agreement in good standing:

  1. Pay at least your minimum monthly payment when it’s due (direct debit or payroll deductions make this easy). If your payment is even one day late, your payment plan may default and will have to be re-negotiated;
  2. Include your name, address, SSN, daytime phone number, tax year and return type on your tax payment to make sure it gets associated with your account;
  3. File all required tax returns on time;
  4. Pay all taxes you owe in full and on time (contact us to change your existing agreement if you cannot);
  5. Continue to make all scheduled payments even if the IRS applies a refund to your account balance; and
  6. To ensure your statement is sent to the correct address, contact us if you move or complete and mail Form 8822, Change of Address (PDF)

By: Timothy S. Hart
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