How to Make IRS Installment Payments: A Guide
An IRS installment agreement allows a taxpayer to pay their tax debt to the IRS over time, rather than in one lump sum. Like a credit card payment, you can negotiate with the IRS to make monthly payments to pay your debt over a period of years. You are also paying both your debt and interest in addition to penalty fees as well. One of the most important things to remember is not to miss any payments. If you do, the IRS has the right to revoke the monthly payment agreement making you responsible for paying the full amount once again. To avoid the latter, here are few points to follow when agreeing to commit to monthly payments to the IRS:
- Make Plans to Pay for 72 Months: The general term for an installment agreement is 72 months, so you should be aware of this when completing your financial planning for that period of time.
- Set the Monthly Payment: You do get some input on how much you want to pay per month. It is suggested that to take this process seriously and consider what you can afford to pay. Let the IRS know what you propose to pay each month. Propose as much as you can realistically afford, not more, not less. The IRS does not make it easy to re-negotiate and if the amount you propose is too low or if you do not suggest an amount, the default payment will be what you owe divided by 72 months.
- Future Tax Returns: You are required to stay current with your tax returns while you are paying back the debt to the IRS. This is also something to consider when setting up your monthly payments.
- Making Payments: You have a few payment options for sending your payment to the IRS. An option that is usually most avoided is the direct payroll deduction. In this case, your employer must send the payment to the IRS on your behalf. If you prefer not to involve your employer, then you can for your bank automatically withdraw the payment from your bank account.
The IRS can revoke an installment agreement if:
- You fail to file a tax return or pay your taxes after the installment agreement is agreed upon.
- You miss a payment. On the first missed payment, the IRS usually waits either 30 or 60 days before revoking the agreement.
- Your financial situation changes significantly (in either direction).
- The IRS discovers that some of the information that you provided to them was not true or incomplete.
Success Tax Relief Can Help You Navigate IRS Installment Agreements
Success Tax Relief has more than 30 years of experience working with the IRS on behalf of taxpayers. We can review your tax returns and any tax debt helping you apply for an installment agreement. Our team understands that this is a stressful process and will do everything that we can to take the unnecessary pressure off of your shoulders. If you have questions about your IRS installment agreement, give our team a call right now at 1-877-825-1179 or connect with us through our website.