IRS Installment Agreement

It comes as no surprise that financial issues remain one of the top stressors in America.  Worry about finances can take a toll on physical health, mental health, work life, and relationships with family and friends. Issues with taxes and the IRS can be complicated and frustrating, and the process of negotiating with the IRS can feel hopeless. In spite of this pressure, there are tax professionals ready and willing to help sort through this difficult process, as long as you seek IRS help. If you have unsettled tax debt, know that there are different options available to you. When trying to settle tax debt, many people are best served through an IRS installment agreement that allows them to repay their balances over time. This type of resolution can involve a variety of different programs and payment amounts, all leading to a long-term solution covering the tax balance in full or at the negotiated amount.


How Do I Get an IRS Installment Agreement?

While the most ideal way to settle tax debt is to pay in full immediately, this is not always a viable option for many individuals with unpaid taxes. Many people are unable to pay the total amount right away. Those who attempt to pay all of their debt without having the cash in-hand will seek other means. Often this involves taking out an equity loan, refinancing your home, using credit, or getting help from family and friends. Fortunately, if you are unable to make a full payment, there is no need to worry, as there are other options available to you.

Usually, the most feasible option comes in the form of an IRS Installment Agreement. An installment agreement comes about after you have negotiated with the IRS on a plan that you will make monthly payments until the tax debt, including all penalties and interest, are paid off. When you enlist in an installment agreement, you make an agreement with the IRS to make the entailed payment on time every month, and that you will no longer neglect to pay off your tax debts in the future.

One of the main tricks to getting an IRS installment agreement accepted is in choosing the right agreement type. Each request must fit a different financial situation, and the installment agreement request should involve different facets of the individual’s life and their specific needs. Handling tax debt on your own can lead to long approval processes and possibly paying more than one would if you went with a trained tax debt negotiator.


Which Installment Agreement is Right for Me?

If you decide that you want to pay off your tax debt in monthly installments, then the next step is to find the best Installment Agreement plan for you.  In order to obtain an Installment Agreement, you must formally submit a plan with a statement of all of your financial details in order. If your proposal is approved, then the IRS will immediately halt any levies and you will more than likely be released. Because you have agreed to settle your debts, you will remain in good standing with the IRS. Community Tax professionals will help you find which plan is right for you

There are four different kinds of installment agreements.  The different options are created for different income levels and different levels of debt. The IRS will likely work with you to find the solution that works best, so long as you provide all of the appropriate information.

In order to qualify for any of the below installment agreements, individuals must owe up to $50,000 or less in combined individual income tax, penalties, and interest. You must have also filed all past tax returns.  In order for a business entity to qualify, the business must owe $25,000 or less in payroll taxes in addition to filing all returns.  In this event, you are seen fit by the IRS to apply for an online payment agreement.

  • Guaranteed Installment Agreements. In most cases, this type of agreement is the easiest to obtain. This is why it is called the Guaranteed Installment Agreement—the IRS is required to allow you to use this installment plan if you meet the most basic requirements. One of the best reasons to use this plan is because the IRS will not file a federal tax lien, which if instated, would limit your chances of obtaining credit in the future. Another key benefit is that you are able to pay a minimum payment of $25, as long as you pay it off in three years or less. The biggest requirement is that your balance, including interest and penalties, be $10,000 or less. You must also first file any delinquent tax returns, in order to start with a clean slate and not accrue any more interest or penalties. If the IRS approves your request, you have both agreed that you will pay off your debt within 36 months, so you must be financially prepared to do so. You must have also filed and paid on time in the last five years. In addition, you must also not have had an installment agreement in the previous five years. As long as you follow these rules, and agree to file and pay on time for the future, you are sure to get approved for this installment plan. 

  • Non-Disclosure Installment Agreement. In the event that a taxpayer owes $25,000 or less, he or she may invest in a Non-Disclosure Installment Agreement. The main attraction of this plan is that the taxpayer is allowed to pay off their back taxes in monthly installments without disclosing any of their extensive financial details. This includes exclusion of filling out a Form 433F, Collection Information Statement; a statement that would oblige you to report all accounts, lines of credit, credit cards, business information, non-wage household income, monthly living expenses, and all other assets. Another draw is that because you do not have to present as much information, the paperwork is much easier to complete. In addition, the Non-Disclosure Installment Agreement allows the taxpayer to pay off tax debt in seventy-two months, which is the equivalent of seven years. Finally, just as with the Guaranteed Installment Agreement, this installment plan does not place a lien in order to secure payments. That means that so long as you pay off your installments on time, you will be able to secure credit without your tax debt effecting your chances. The Fresh Start Initiative was introduced by the IRS to allow more people to pay off their debt without crippling their financial obligations.

  • Streamlined Installment Agreements. Thanks to the Fresh Start Initiative, the Streamlined Installment Agreement has increased the flexibility of debt from $25,000 to $50,000. Similar to the Non-Disclosure Installment Agreement, you will have to promise that you will pay off all debt within seventy-two months. You must also agree to file all of your taxes, including late files from years prior, and promise that you will pay all of your taxes in the future. Another benefit inherent to the Non-Disclosure Installment Agreement is that this plan does not require you share a financial statement with the IRS. However, you may need to disclose some financial information during the financial resolution process.  You may apply for two different kinds of Streamlined Installment Agreements depending on your debt: one for $25,000 or less, and another if you owe $25,001 to $50,000.

  • Partial Payment Installment Agreements. If you do not qualify for any of the above installment agreement plans, you may want to apply for a Partial Payment Installment Agreement. Under this plan, you are able to adjust your monthly payment based on what you can afford minus living expenses. In the event that a taxpayer is left destitute and without basic necessary things like food and shelter, a plan like this is designed to make the payment process easier. Unfortunately, the IRS may enforce a tax lien in this circumstance in order to secure your payment, and as a result you may find yourself having difficulty obtaining credit. If you are interested in this installment agreement, you must be aware to fill out a financial statement form as issued by the IRS. Once in the hands of the IRS, they will analyze the statement form and designate what you will pay based on your finances.

 

In the case that you are ineligible for online payment agreements, you will still be able to pay in installments. In order to do so, you will complete and mail a form called the Form 9465, Installment Agreement Request, and Form 433-F, Collection Information Statement.  You may also call the number listed on your notice you received from the IRS.


Follow the Guidelines of Your Agreement

Within your agreement, you will have to follow certain stipulations. For instance, your future refunds will be applied to your tax debt until payment is completed. In addition, you will have to pay at least your minimum monthly payment when it is due. Every payment must include your name, address, social security number, phone number, tax year and the return type of your payment. In the future, you will have to pay all tax returns on time, and as mentioned earlier, those refunds may be applied to your tax debt by the IRS. If your refund is applied to your debt, you will still have to make the minimum monthly payment for that month as well. Finally, always be sure that your statement is sent to the correct address, and if you change your own place of residence, that you mail a Form 8822, Change of Address form.

It is important to follow the guidelines of your installment plan since you are already walking a thin line with the IRS. If you do not follow these rules, you will be in danger of going into default and may face severe penalties from the IRS. In the case of a default, you will still accrue penalties and interest. If you happen to go into default, you may still reinstate your agreement. However, you will likely face a reinstatement fee, which will only add to your expenses.  These fees will vary based on the payment agreement you have and have risen since January 1, 2017.




Why Use a Service Like Community Tax?

While you navigate this tricky Installment Agreement process, it is key that you have someone by your side who can help you. The tax professionals at Community tax are expertly trained in all tax matters related to the IRS. Our specialists provide only the best in customer service to help organize your finances and implement an effective plan to support your needs. We have a proven success record with our clients in securing the payments they can afford.

Tax professionals like those at Community Tax are well schooled in all the various versions of IRS Installment Agreements, and how to get the IRS to approve them quickly. We work diligently to effectively enlist a plan so that you can stop accruing penalties and interest on top of your tax debt. Our specialists will then teach our clients how to stay current with future IRS payments, state taxes and all filing deadlines. Getting settled with debt from the IRS does not have to be a burden on your life, and with help from Community Tax, you will be well on your way to paying off debt and creating a financially secure future.

Community Tax’s practitioners and case processors will help take a client from the installment agreement request all the way to the final payment. They will work directly with the IRS agents and ensure that the representation will lead to the best personalized solution for every client. Anyone looking for an IRS installment agreement can truly benefit from the right resolution or settlement. Getting in touch with a tax expert is the best move toward the answers every federal or state tax debtor needs. Call 1-888-676-4319 to consult with one of our professionals today!