An IRS Installment Plan: Is It Really Your Best Option?
If you have more tax debt than you can handle, you may be looking for options for settling this debt with the Internal Revenue Service (IRS) in a way that will not negatively impact your financial bottom line. The idea of paying the IRS the full amount due in one lump sum can be overwhelming and impossible for many who do not have extra money in their savings account. One option to consider is an installment agreement, which allows you to pay the IRS in monthly payments, rather than all at once. This can ease the burden and give you time to pay the full amount so that you and your family are more comfortable during the process.
Here are some facts and tips about installment agreements that can help you determine if this is the best option for you:
- How much do you owe? If you owe the IRS $50,000 or less, you will likely be able to get an installment agreement plan for 72 months just by making a formal request and without providing very detailed financial information. If you owe more than $50,000, you will have to provide additional information and negotiate with the IRS.
- Are your tax returns current? The only way the IRS will agree to an installment plan is if you are current on your tax returns. If you have yet to file previous year’s tax returns then you are not eligible for an installment agreement.
- Interest and penalties still apply: It is important to note that even though you may be paying your debt to the IRS via an installment agreement, the IRS will still charge you both interest and penalties. This means that unless you can pay more than the minimum due, you may pay for years and still owe even more than when you started paying.
- Can you afford it? It is also important to consider whether you can afford to pay the monthly payments that will be due with the installment agreement. If not, you may want to consider requesting an offer in compromise instead, which settles your tax debt for less than what you actually owe.
- Payment Methods: If the IRS approves your installment agreement, you will be expected to pay either via a direct payroll deduction or by having your bank account debited. If you miss a payment, the IRS can revoke the agreement.
Is An Installment Agreement Right for Me?
The team at Success Tax Relief can help you decide if requesting an installment agreement from the IRS is the best path forward for you, given your unique set of circumstances. We can help you determine the amount you should propose as your monthly payment to the IRS and complete the necessary paperwork and help you submit it so that you will have the best possible chance for approval. Our team also offers audit support, general tax return support and can help you manage all communication with the IRS. For more information about an installment agreement or other tax support services, call Success Tax Relief today at 877-825-1179, or contact us online.