4 Reasons Why the IRS Might Deny a Payment Plan
If you’ve been following our advice, then you know that one of the top services that Success Tax Relief offers is affordable installment payment plans with the Internal Revenue Service (IRS). Now 99% of the time, we’ve been successful in helping taxpayers pay a reasonable monthly amount to the IRS without breaking their bank. However, there is that 1% where other solutions will need to be sought out because the IRS has denied a payment plan for one of our clients.
Bear in mind that we communicate with the IRS our clients’ behalf. We arrange for all of the necessary documents to be presented to the IRS so that they can review your case. It is essentially up to the IRS to determine the terms of your tax case. They have the right to deny a payment plan for you. Here’s why:
You defaulted on a previous payment plan with the IRS.
If the IRS has already trusted you to pay off a debt that you defaulted on, then chances are they won’t go into another agreement with you. From the IRS’ perspective, you have bad credit with them. This is a challenging thing to overlook with the assistance of any tax relief service.
You’re in the process of paying on a tax debt from a previous year.
This is referred to as the pyramid effect. In contrast to defaulting on a previous payment to the IRS, you might still be in the middle of paying on a tax debt from a previous year, and therefore may be financially unable to take care of the current year. While this may be one of the reasons the IRS may deny you of another payment plan, there are still some solutions for you because you are in good faith with them.
This is where Success Tax Relief can come in and assist you with other alternatives like appealing your denial and helping you modify your current installment agreement and other solutions that you might qualify for.
The plan doesn’t pay off the debt before the end date.
When negotiating with the IRS, the end result is for the IRS to get their money. If the terms of the negotiation aren’t in their favor, you could very well be denied of a payment plan. Usually, in an IRS installment plan, there’s a deadline. So, within that deadline, a certain amount of money needs to be paid to them every month. If the amount of money you owe to the IRS is substantial, then chances are your monthly payment may be too. If the monthly amount you can afford to pay doesn’t pay off the total debt, you could be denied.
Your living expenses are too excessive.
Other reasons for getting an installment plan denied is that your living expenses are too luxurious. The IRS will review your annual income and expenses. In other words, you’ll be audited. If the IRS believes that you’re excessively spending money on expenses that could be put toward your tax debt, then you can be denied.
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