IRS encourages taxpayers to pay what they owe as quickly as possible. For those individuals or businesses not able to resolve a tax debt immediately, an installment agreement can be a reasonable payment option. Installment agreements allow for the full payment of the tax debt in smaller, more manageable amounts.
Let our team of experienced tax attorneys, Certified Tax Resolution Specialists, and CPAs increase your chances of settling your tax debt for less than what you owe, if you qualify. In addition to negotiating the lowest possible monthly installments, we may also be able to work with the IRS to get levies released a lot quicker.
What do you have to do to be eligible for an installment agreement?
- To be eligible for an installment agreement, all returns that are due must first be filed.
What are the payment terms?
- Installment agreements generally require equal monthly payments.
- The amount of an installment payment will be based on the amount owed and on the taxpayer's ability to pay that amount within the time legally available for the IRS to collect.
- By law, the IRS has the authority to collect outstanding federal taxes for ten years from the date of assessment.
Does the Taxpayer have to sign a waiver to extend the statute?
- For taxpayers that enter into an installment agreement, the IRS may require a signed waiver to extend the time IRS can collect.
- Taxpayers who already have an installment agreement from a previous amount owed may still find help.
- All of the amounts owed could be included in one installment agreement.
- Additionally, a Collection Information Statement may have to be completed to further illustrate their financial situation.
|While it is always in the best interest of the IRS to get a signed waiver, it may not be in the taxpayer's best interest.
|If you are asked to sign a waiver, protect your rights, seek the advice of a Tax Expert first.
What are the conditions of an installment agreement?
- As a condition of an installment agreement, any refund due in a future year will be applied against the amount owed.
- Therefore, taxpayers may not get all of their refund if they owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support.
- The IRS will automatically apply the refund to the taxes owed.
- If the refund does not take care of the tax debt; then the installment agreement continues until all of the terms are met.
Does Interest stop with an installment agreement?
- Interest does not stop accruing until the entire obligation is paid.
- An installment agreement is more costly than paying all the taxes owed now.
- Penalties and interest continue to be charged on the unpaid portion of the debt throughout the duration of an installment agreement.
Are there fees to Set-up an Installment Agreement?
- The IRS charges a user fee of $43 to set up the installment agreement.
- It is possible for an installment agreement to be reinstated if the agreement defaults.
- Also, installment agreements may be restructured to include additional amounts owed in one agreement.
- Reinstating or restructuring an existing installment agreement will cost an additional $24 user fee.
What is an Enforced Collection Actions?
Generally, IRS enforced collection actions (i.e., levy against personal or real property) are not made while an installment agreement request is being considered, or:
- While an agreement is in effect,
- For 30 days after a request for an agreement has been rejected, and
- For any period while a timely appeal of the rejection or termination is being evaluated by the IRS.
Do payments have to be made timely?
- Yes, payments must be made timely.
- Throughout the term of an installment agreement, payments must be made on time.
- If payments cannot be made due to a change in financial condition, taxpayers should contact the IRS immediately.
Can my installment agreement be defaulted?
- Yes. Failure to make timely payments can default the agreement.
- A defaulted installment agreement could subject a taxpayer's account to enforced collection action and potentially have a negative effect on a taxpayer's credit standing.
What is an Annual Statement of Balance Due?
- In accordance with the law, installment agreement taxpayers receive an annual statement from the IRS.
- The statement provides the amount owed at the beginning of the statement period, the payments (credits) posted to account(s), any fees or assessments, and the ending balance.
- Currently, the annual statement is sent each year in July.
We can help you reach a resolution on your back taxes and obtain a fresh start towards financial freedom. Get a free Tax Relief Consultation from one of our experienced tax resolution experts or call 866-IRS-Problems.
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Why hire a Tax Attorney or Certified Tax Resolution Specialist?
While taxpayers may always represent themselves before the IRS to resolve back taxes and IRS problems, many taxpayers find dealing with the IRS frustrating, time-consuming, intimidating or all of the above and so they make the decision to hire professional tax help (specialized tax attorney, tax resolution firm, etc.) to negotiate a tax relief settlement with the IRS on their behalf.