IRS has a program in which they will allow taxpayers to pay off their taxes through a long-term payment plan, also known as an installment agreement. In this installment agreement, the IRS helps you by establishing a time period to pay off your tax issue. While it is always best to pay taxes on time, if a taxpayer is unable to pay, an installment agreement is a great option. The IRS offers three different types of installment agreements: streamlined, partial payment, and non-streamlined.
Streamlined Installment Agreement
A streamlined installment agreement has the following requirements, including:
· tax liability, interest, and penalties do not exceed $50,000;
· must pay off the balance within 72 months (6 years)
· The proposed payment must be more than or equal to the “minimum acceptable payment” which can be calculated by dividing the tax liability, interest, and penalties by 50.
The IRS will not file a federal tax lien as long as the taxpayer pays the fee to set up the installment agreement.
Partial Payment Installment Agreement
A partial payment installment agreement allows the IRS to make arrangements with taxpayers to begin partial payment of their tax liability. In order to qualify for a partial payment installment agreement, taxpayers must fill out a financial statement in accordance with Form 433-F to report their income and living expenses. The IRS will then review and verify all information. If the taxpayer has assets that may be sold in order to pay off any tax issues, additional information will need to be provided to the IRS. Following approval of a partial payment installment agreement, the taxpayer must cooperate in a financial review every two years until the payment is complete. Following these financial reviews, the taxpayer’s payments may potentially increase, or even worse, the agreement could be terminated.
Non-Streamlined Installment Agreement
When a taxpayer owes more than $50,000, but can make monthly payments to the IRS, a non-streamlined agreement is another option. Rather than automatically approving this type of installment agreement, a non-streamlined agreement is negotiated between the taxpayer and IRS by Kentner Law. After filing Form 433-F, Collection Information Statement — Kentner Law will propose an installment payment amount for the IRS’s consideration. It usually takes a few months for the IRS decision to either accept or refuse the installment agreement proposal.
What Is A Payment Plan?
Installment agreements and payment plans are not required to be paid in full. A payment plan offers an agreement made with the IRS to pay the taxes you owe within a specific timeframe. It helps during periods of financial hardship. You can request a payment plan if you feel as though it will be beneficial to you and that you will make your payments within the extended timeframe of your balance due.
Methods of installment payments include:
· Check or money order
· Credit card
· Debit card
· Electronic Federal Tax Payment System (EFTPS)
· Online Payment Agreement (OPA)
· Payroll deduction
· Am I Eligible For A Payment Plan?
You are likely eligible for a payment plan if:
1) The total amount of tax liability is less than $25,000;
2) The taxpayer can pay off the installment payment plan in less than 60 month;
3) The taxpayer has filed all of their income tax returns.
Are There Any Fees Associated With A Payment Plan?
Yes, there are certain fees attached to IRS payment plans. If the payment plan options or installment agreements is approved by the IRS a fee will be added to the taxpayer’s tax bill.
Can The IRS Revoke An Installment Agreement?
Yes, the IRS can revoke an installment agreement. Some of the circumstances which will allow the IRS the right to revoke your installment agreement include:
· The taxpayer misses a payment;
· Inaccurate information was provided by the taxpayer on Form 433-F;
· The taxpayer does not file a tax return or pay taxes after an agreement has been entered upon; or
· The taxpayer is paying under a partial payment plan and a review indicates that there has been a change in their financial position.
How Can I Qualify For An IRS Installment Agreement?
In order for a taxpayer to qualify for an IRS installment agreement, the taxpayer must meet the following criteria:
· You must have, within the last 5 years, filed all tax returns, paid any taxes owed, and have not entered into a previous installment agreement;
· Owe less than $50,000;
· Be unable to pay the tax liability by the due date or within 120 days;
· Tax liability must be paid within 3 years;
· Must pay at least the minimum monthly payment.
If the taxpayer meets all of these criteria, the taxpayer will qualify for one of the IRS’s various types of installment agreements.
Why Should I Pay My Taxes On Time?
It is the law that an individual must pay their taxes on time. The IRS is allowed to issue penalties for any individuals that fail to do so. Taxpayers are required to file a tax return each year, as well as pay any taxes owed by the deadline. If a taxpayer is unable to do so by the initial filing due date, the balance of unpaid tax issue can then be subject to interest rates and a penalty in the form of a monthly late fee.
Here are some of the key benefits of paying taxes on time are:
· Avoids any late filing fees, interest rates or penalties;
· Avoids the offset or withholding of future funds;
· Avoids issues when obtaining a loan.
If taxes cannot be paid on time, it’s always best to be proactive and set up a payment agreement with the IRS.
NEED TAX RELIEF?
Have you received a notice from the IRS, or if you have years of unfiled tax returns, reach out to our office. We’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Click here to schedule your no cost consultation. We charge a flat fee for our services and will stop the IRS collection efforts.
Jace Kentner
Tax Attorney
573-708-7870
jace@kentnerlaw.com
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