Unable to pay the full amount owed to the IRS?
If a taxpayer is unable to pay his/her tax liability in full there are other options, such as Installment Agreements. There are different types of Installment Agreements, depending on amounts owed and levels of non-compliance with IRS rules.
We will never file an Installment Agreement with the IRS that our clients cannot live with, our proprietary process will always identify the lowest legally possible payment to the IRS and the best plan that the IRS must accept.
A taxpayer's request for an installment agreement will be denied if all required tax returns have not been filed.
Any refund due to a taxpayer in a future year will be applied against the amount owed.
If a taxpayer's refund is applied to his/her balance, he/she is still required to make the regular monthly installment payment until the debt has been satisfied in full or the "Collection Status Expiration Date" (a 10-year period starting when the tax return has been filed) has expired.
Guaranteed Installment Agreement
A taxpayer is eligible for a guaranteed installment agreement if the tax owed is not more than $10,000 and meets the following criteria:
During the past 5 tax years, the taxpayer (and his/her spouse if filing a joint return) have timely filed all income tax returns.
During the past 5 tax years, the taxpayer has paid any income tax due.
During the past 5 tax years the taxpayer has not entered into an installment agreement for payment of income tax or an offer in compromise has been accepted.
The taxpayer agrees to pay the full amount owed within 36 months and agrees to comply with the tax laws while the agreement is in effect.
The taxpayer is financially unable to pay the liability in full when due.
Streamlined Installment Agreement
Streamlined installment agreements work best for taxpayers who owe the IRS up to $50,000 and who cannot pay off their tax debt in a lump sum. The IRS does not require a comprehensive financial statement (IRS Form 433f – Collection Information Statement). However, a few conditions apply:
The taxes owed are not more than 5 years old and all tax returns must have been filed.
There are no other Installment Agreements currently under way with the IRS.
The taxpayer is not in Bankruptcy and no Offer in Compromise has been accepted by the IRS.
The taxpayer agrees to pay the full debt over a 72 month period in equal payments (amount owed divided by 72; example: if the amount owed is $27,000.00, the payment would be $375.00 per month, i.e. $27,000/72 equals 72 monthly payments of $375.00).
Partial Pay Installment Agreement
When a taxpayer is not able to pay the owed tax debt in full we can negotiate an Installment Agreement based on what the IRS calls "Disposable Income" which is the difference between net earnings minus "Allowable Living Expenses". Our proprietary process determines if a taxpayer qualifies for this plan and if so what the legally lowest monthly payment that the IRS must accept will be.
Taxpayers who are being considered for a Partial Pay Installment Agreement must provide complete and accurate financial information that will be reviewed and verified. Additionally, taxpayers with Partial Pay Installment Agreements will be subject to a subsequent financial review every two years. As a result of this review, the amount of the installment payments could increase or the agreement could be terminated, if the taxpayer’s financial condition improves.
The Partial Pay Installment Agreement payment option provides an appropriate payment option for many taxpayers.
Best options for payments:
There are two options for making payments once your Installment Agreement is approved:
Use a direct payroll deduction. Request a payroll deduction on Form 2159, Payroll Deduction Agreement. Your employer must agree to send payments to the IRS each month using the IRS's payment slips. The IRS application fee for this plan is $150.00
Use a direct debit. Have your bank automatically debit your checking account each month and send a payment to the IRS. As long as you keep the account open, this is the most foolproof way to make sure you don't miss a payment and risk having the agreement revoked. The IRS application fee for this plan is $52.00
Future refunds will be applied to the tax debt until it is paid in full. Regular monthly payments must still be made according to the agreed payment schedule.