If you owe the IRS money, you may be wondering if you should enter into an installment agreement. This can be a confusing process, so it’s important to understand all of your options. In this blog post, we will discuss the different types of installment agreements available from the IRS, and help you decide which one is right for you.
There are many options when it comes to paying taxes that are owed. One of the most common is an IRS Installment Agreement, which allows for payment over time via monthly installments rather than a lump-sum payment. These agreements can vary in length from one year up to ten years depending on how much money you owe and other factors such as income level. The options include:
- An extension of the time to pay up your whole tax debt balance
- You can defer the tax debt payment
- Offer in compromise
The IRS rules for Installment Agreements
1. If you owe the IRS taxes for more than a year, all the years’ debt will be bundled into one installment agreement.
2. The IRS will re-calculate the amount of your tax debt every year. If you have not paid off all taxes owed at this time, they may add more time to pay off any unpaid balance by extending the term length of your agreement up to five years or ten years depending on what type it is (standard vs streamlined).
3. The agreement may come with a federal tax lien: a legal claim the IRS has against your property to secure payment of your tax debt.
4. Be consistent with your payments. If you fall behind on an installment agreement, the IRS may seek other collection actions to collect what is owed them. To be in compliance with an installment plan, you must make all scheduled payments by their due date each month or quarter for as long as it lasts (up until ten years).
How To Get Into an Installment Agreement With The IRS
The first step in getting an installment agreement is usually to file Form 9465, Installment Agreement Request. You can find this form on the IRS website.
This will give the IRS some information about you and your tax debt, and allow them to determine which type of installment agreement is best for you.
Types of IRS Installment Agreements
Guaranteed installment agreement: This is the most common type of agreement and can only be used if you have filed your required tax debts, owe $10,000 or less in tax debt, and can pay the debt in three years.
Streamlined installment agreement: This agreement applies in cases where you owe the IRS not more than $50,000 in tax debt, including penalties and interest. The term of the agreement is six years.
Partial payment installment agreement: This type of agreement can be used if you don’t meet the qualifications for a guaranteed or streamlined installment agreement, but still want to pay your taxes over time. You must include an explanation as to why you don’t qualify for the other two types of agreements.
Offer in compromise: This is a type of agreement where you offer to pay the IRS less than what you owe them. The IRS will only accept an offer in compromise if they believe that they will collect more money from you if they take further collection actions (such as through wage garnishment or bank account attachment).
Partial pay installment agreement: This agreement applies in cases where you owe the IRS more than $100,000 in tax debt. You must include an explanation as to why you can not pay off your whole balance within five years or less with a guaranteed installment agreement or ten years for streamlined agreements.
The IRS is willing to work with you on an installment plan, but keep in mind that the amount of time it takes for them to approve your request depends on how soon they receive all required paperwork. You should expect some back and forth communication between yourself and the IRS during this process. The best way to succeed with an IRS Installment Agreement is to get in contact with them as soon as possible.
How To Stick With An IRS Installment Agreement
For many people, paying back taxes on their own can seem overwhelming or impossible due to financial difficulties such as unemployment, divorce, and medical bills. Fortunately, there are things that you can do to help make it easier to stick with an installment agreement and avoid any penalties from the IRS.
Some things that you can do to make sure you are in compliance with your agreement include: making all payments on time, keeping accurate records of your income and expenses, and filing all required tax returns on time.
We Can Walk The Whole Way With You
Our team of tax professionals is in good standing with the IRS and can assist you in setting up an installment agreement with the IRS. We will work together to find a payment plan that works best for your situation. Morris and Associates are experts when it comes to helping individuals and companies find tax relief in Georgia but can help no matter where you live or whatever tax questions you have. Contact us to help with your taxes and possibly even reduce the amount that you owe.
