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IRS Installment Agreement Solution

IRS Installment Agreement

Tax Relief: From our experience as New York Tax Attorneys, an IRS installment agreement solution is a good option if you owe the IRS taxes and presently are unable to make a payment in full to satisfy the debt and you have either assets or regular income to make good on your debt, you may very well be able to arrange an installment agreement of some form with the IRS. This page discusses the various types of tax relief installment agreements can provide and the conditions under which you may be qualified to obtain this form of IRS relief.

There are 3 main steps to set up an IRS installment agreement solution, each with its own special considerations:

Step 1: Before you can establish an IRS installment payment agreement:  First, file all your past tax returns

Even if you don’t have the money to pay all your past taxes at this time, it is still important that you complete and file all your prior-year returns.    We cannot establish your total tax liability and determine your available options until all your returns have been filed.   We are tax professionals that can prepare your prior-year returns or amended returns. If you don’t file your returns, the IRS will eventually create a Substitute Return for you; however, it will likely overstate the tax you actually owe due to the assumptions the IRS makes when preparing this Substitute Return.  So it is always in your best interest to file your return with your information.  And finally, the IRS will not enter into negotiations or work with you to establish an installment agreement or any kind of resolution settlement or payment plan until all you prior-year returns have been filed.

There are several different IRS installment agreement plans available and discussed below.  We can will advise you about the options and plans that are right for you based on your financial situation, profession, age, marital status, and other life factors. We’ll make the calls, fill out the paperwork and tailor a solution to your needs and work with the tax authorities to get the right installment agreement plan set up for you.

Regular IRS Installment Agreement Payment Plans

There are several flavors of the regular installment agreement program depending on the amount you owe, what you can afford to pay back on a monthly basis and how much information you want to disclose to the IRS.  If you owe less than $50,000 and can afford to pay this back over six years, with interest and penalties, you may qualify for a payment plan without full financial disclosure and supporting documents.   However, many taxpayers cannot afford this streamlined approach and therefore must submit financial statements along with supporting documentation to prove their case.  Taxpayers must substantiate their total monthly income and expenses, disclose all available assets (both physical and financial), list any equity in property and answer quite a few questions concerning themselves and their spouse’s financial affairs. This information is used to analyze what property or assets may be available to pay the tax debt and therefore it is a good idea to keep all your tax records.

Tiered IRS Installment Payment Plans

In some cases you may qualify for a graduated payment plan where a lower amount is paid in the first 12 months which then increases to a higher monthly amount for the remainder of the plan. Usually the IRS will need a substantiated reason and documentation to allow for this.

Partial Payment IRS Installment Payment Plans

These plans are for taxpayers who cannot afford to pay their full tax debt before the IRS statute of limitations expires.  Because the IRS is agreeing to accept less than the full amount of the tax debt to be repaid, these are the most stringent, complex, and lengthy plans to get approved.   Taxpayers must make a full financial disclosure with supporting documentation.

Step 2:  Implementing the Chosen IRS Plan

After considering your personal situation and financial resources, we  will advise you on the best plan type and monthly payment amount to satisfy the IRS or state tax authorities.  As you can see there is wide variety of IRS installment agreement options.  The tax professionals at our firm will make sure you understand the trade offs and get the best outcome for you. Based on your feedback, we will prepare the necessary forms and schedules and negotiate the proposed plan with the federal and state tax authorities on your behalf.

State Tax Installment Plans

Each state has its own rules, regulations, and payment plan requirements.  Some states closely follow the federal approach, outlined above, but others have additional special rules and qualifications.   Your Tax Specialist will advise you of any special state tax requirements.

Here’s how a New York Tax Attorney can help you:

  • Prepare your prior-year tax returns or amend prior-year returns if necessary
  • Explain the various  IRS installment agreement plans and options available to you
  • Prepare all the supporting material for submission to the IRS or state tax authority
  • Present and negotiate the payment plan details with IRS and state tax officials.

The IRS installment payment agreement option is a great way for many people to affordably pay-off their past tax debt and get the IRS off their backs, but it may not be the best solution for you.

Step 3: Implement The PLAN

If you’ve fallen behind on filing or paying your taxes, there can be severe consequences including bank levies, wage garnishment, tax liens filed against your property, lower credit scores, and the possible loss of your job for certain professionals and government employees.  In addition, you will be pursued relentlessly by the IRS and state tax authorities through their collection efforts and activities.

Caution: If you have defaulted on a previously established IRS installment agreement, you may need special help reestablishing a new agreement with the IRS.  Please click here for more information or call us. Please also keep in mind the IRS can use private tax debt collectors to collect on the tax debt. 

The expiration of the statute of limitations on the tax debt is a factor that must be weighed in arriving at the total payment of back taxes.  This can be a lengthy and complicated process, but it is the right choice for some people.

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