Pros and Cons of IRS Payment Plans
IRS payment plans can be an excellent way to finally eliminate a tax debt you’ve been carrying for years. On the other hand, they could be more trouble than they’re worth. Just like with anything else, there are both pros and cons associated with filing for one of these programs.
Experts from Success Tax Relief weighed both sides of the IRS payment plan equation to help taxpayers who aren’t sure whether one might be right for them.
Pros & Cons of Installment Agreements
When people say they’re filing for an IRS payment plan, they’re usually referring to a monthly Installment Agreement (IA). One of the biggest advantages of this method is that all taxpayers who owe less than $10,000 and haven’t had any brushes with the IRS in the past can get approved for one automatically. Around 90 percent of indebted taxpayers fit these criteria. Those who owe up to $25,000 may still qualify for an IA plan they can pay off in five years. Even if you owe more than this, the IRS can still negotiate with you under what they call good faith terms.
However, those who opt for this kind of plan have to pay the balance in full within three years. Interest and penalties will continue add up while you’re making installment payments, and IRS agents will adjust these figures every quarter. Extra costs hold steady throughout, so they can add up to the equivalent of a 15 percent interest rate.
Streamlined processing might be available to you if you’re dealing with a sizable burden. If you’re approved, then the IRS will put your case on the top of their list. Watch out, though, because their answer might still not be a good one. Contact Us if you’d like more information on whether this kind of plan is right for you.
Pros & Cons of Financial Disclosure
You can potentially reduce your overall tax debt with an Offer in Compromise or a Partial Payment Installment Agreement. Form 433-F will give you a chance to tell the IRS about your financial situation. They’ll then determine your ability to pay and possibly drop your burden as a result.
Sharing financial data with the IRS will increase your chances of proving you can’t afford to pay off your tax debt. It can also help you to apply for Currently Not Collectible status. If you don’t have the income needed to pay of your debt, then the IRS won’t have any option but to suspend their collection activities.
On the other hand, the IRS might state you have sufficient income or existing assets and continue to try and collect them. Some people feel that the IRS has a rather narrow definition of what livable income is. There’s a possibility that they might find you have what they feel is more than enough to live on and try to get their cut. If you’re going to go this route, then you’ll want to have as much information on hand as possible before you send in the application.
Professional Payment Plan Relief
Don’t feel like you have to go through this alone. Working with a tax professional can make the journey toward freedom from your IRS burden that much easier. Success Tax Relief has helped hundreds of taxpayers like you who aren’t sure what kind of payment plan is right for them. Call 877-825-1179 or use the Contact Form on our site to get help from a professional tax relief specialist today.