IRS Payment Plans
If you’re behind on your IRS payments, don’t panic. A payment plan may be the solution for you. Here at our law firm, we can help you set up a payment plan that works with your budget and gets you back on track with the IRS. We understand that times can be tough, and we’re here to help. Don’t let your IRS liability get the best of you – give us a call today.
What is an IRS payment plan?
An IRS payment plan is an agreement between the taxpayer and the IRS to pay off a tax liability. Payment plans are available for taxpayers who owe taxes, but cannot pay them in full at this time. There are two types of payment plans: short-term and long-term. Short-term payment plans allow taxpayers to pay their balance within 120 days. Long-term payment plans extend the repayment period to up to six years or more if you qualify for a statute of limitations based payment plan. Payment plans are not guaranteed for taxpayers in some circumstances and many of these options will require financial disclosures to qualify.
What are the benefits of an IRS payment plan?
There are several benefits to setting up an IRS payment plan. First, it can help you avoid IRS penalties and interest. Second, a payment plan can help you keep your tax liability from growing larger. Third, a payment plan can help you get back on track with the IRS. Lastly, a payment plan can help you keep your tax liability from being turned over to a collection agency.
What types of payment plans does the IRS offer?
The IRS offers a variety of payment plans to help you pay your taxes. These include guaranteed installment agreements, streamlined installment agreements, regular installment agreements, and partial pay installment agreements. The difference in these agreement types is based on the amount of taxes owed, the ability to pay, and other factors.
Automatic/Guaranteed Installment Agreement
The Internal Revenue Service (IRS) offers a guaranteed installment agreement program that can help you if you’re struggling to pay a liability under $10,000. Under this program, the IRS will allow you to pay the balance over 36 months with no financial information required. You can set these up as a direct debit from your bank account.
Streamlined Installment Agreement
The IRS offers a streamlined installment agreement payment plan for people who less than $50,000 in tax liability. The IRS isn’t concerned about whether you have money saved up in a bank account, savings account, 401k or an IRA, or if you have another property. As long as you can pay off your liability in six years (72 months), the IRS doesn’t care whether you have money saved up. At this level, tax liens may or may not come into play so it’s best to seek the advice of a tax attorney.
Regular Installment Agreement
Under a regular installment agreement, you agree to make monthly payments towards your tax liability, but it does require you to provide financial information to the IRS. With regard to these agreements, taxpayers do have to provide financial information to the IRS, and the information provided can have a huge impact on your monthly payment amount. You should always seek the help of a tax professional to set up a regular installment agreement. Regular installment agreements are based upon your ability to make a monthly payment, which the IRS will determine your monthly payment amount based on the financial information provided.
Partial Payment Installment Agreement
The Partial Payment Installment Agreement is available for taxpayers based upon your ability to pay and the 10-year statute of limitations. These agreements require that you provide financial information to the IRS. The minimum amount you’ll be required to pay each month will depend on several factors, including the total amount you owe and your disposable income.
What if I can’t afford an IRS payment plan?
If you’re not able to make monthly payments on a payment plan, the IRS offers other options. You can request a temporary delay in collection action or offer in compromise.
A temporary delay in collection action means that the IRS won’t take any collection actions against you for a certain period of time. This can range from 30 days to years if you qualify for non-collectible status. This can give you time to sell assets or arrange for a loan. The Offer in Compromise program allows you to settle your tax debt for less than the full amount you owe.
You should always seek the help of a tax professional when dealing with the IRS. They can help you determine which payment plan is best for you and your situation.