Are You Eligible for a Long-Term Payment Plan with the IRS?
If you are like millions of taxpayers, the idea of paying the IRS in one large lump sum is daunting and maybe even impossible. After all, who has that kind of money just sitting in a bank account these days? If you owe a tax debt to the IRS that is more than you are able to pay all at once, you may in fact be eligible for a long-term payment plan.
An installment agreement is a tool that the IRS uses to allow taxpayers to pay their tax debt to them monthly instead of all at once (much like a credit card). Paying over time is obviously easier on taxpayers and also increases the likelihood that the debt will actually get paid to the IRS, so they are actually very often quite willing to grant this type of exception.
Installment Agreements: The Details
If you owe the IRS $50,000 or less and you are current on your tax returns, the IRS will likely agree to entering into an installment agreement without any trouble. If you owe more than $50,000 to the IRS, you will have to work a little harder and provide personal and financial information to the IRS as part of your application. But it is still likely that it will be granted.
Again, in either case, you will need to be current on your prior tax returns. If your installment agreement is granted, you will be notified in writing (keep in mind that this could take several months) and you will likely be granted a full 72 months to pay the debt back. As far as making the payments, you can set up a direct payroll deduction or you can set up direct debit from your bank account.
Are there drawbacks to an installment agreement?
You may be wondering whether there is a catch to this? Well, yes, there is…over the long-term payment plan, the IRS still assesses interest and penalties, so you will end up paying them much more over time than if you had paid your original tax debt in one lump sum. You will be charged interest and penalties, which could easily reach 8-10% per year. Also, if you miss a payment, get behind or fail to file future tax returns, the IRS can revoke your installment agreement, leaving you in a very tough position, without this option to fall back on.
Success Tax Relief Can Help You Weigh Your Options
If you have recently received a sizable tax bill and are wondering what the options are for getting it paid, consider seeking the help of a professional. Success Tax Relief has been in business for more than 30 years and our experienced professionals will be able to quickly assess your situation and help you determine how best to proceed. An installment agreement is one very appealing option and there are a few others that you may want to consider. Contact us today to see if an installment agreement is the right option for you!