The Internal Revenue Service (IRS) is an agency of the United States charged with the collection of taxes and administering the internal revenue code. The main body of federal statutory tax law of the United States. The duties of the IRS also include providing tax assistance to taxpayers and pursuing and resolving instances of erroneous or fraudulent tax filings.
With headquarters in Washington DC, the IRS services the taxation of all American individuals and companies along with audits when necessary. An IRS payment plan is an agreement you make directly with the agency to pay your federal tax bill over a certain amount of time. Typically you’ll make monthly payments to settle what you owe. So long as you keep up with that, the IRS usually won’t garnish your wages or seize any bank accounts or property. But getting on an IRS payment plan doesn’t get you out of interest and penalties for late payment; those accrue until your balance is zero.
If your tax bill is too hefty for a single payment, you have options. The IRS can offer you an installment payment plan to help you spread your payments out over a number of months. While it’s stressful to have a tax debt of that magnitude, an installment agreement can make it more manageable. If you aren’t sure you want an installment agreement with the federal government, consider the implications of the alternative. If you don’t pay in full or agree to pay over time, the IRS can and will seize your property, place a lien against your property, or garnish your wages. The government has five different plans to choose from;
- Guarantee Installment Agreement: A guaranteed installment agreement is available if you owe $10,000 or less to the IRS and it’s easy to qualify for the plan. You just need to be sure to meet a few criteria. This installment program is labeled “guaranteed” because it’s simple enough to apply online.
- Streamlined Installment Agreement: A streamlined installment agreement can be used for tax debts up to $50,000. It is easy to qualify for. You can make payments for as long as 72 months (6 years), and no financial statement is needed. The IRS fresh start program makes this possible.
- Installment Agreement for Tax Debt over $50,000: When your tax debt hits $50,000, you may find it difficult qualifying for a payment program. The IRS thoroughly reviews your financial situation so you can pay the debt off as early as possible. You furnish MUST also furnish the IRS with a financial statement.
- Partial Payment Installment Agreement: The IRS may allow you to pay part of your debt if you show you can’t afford the minimum payment for a guaranteed or streamlined installment payment plan. A partial payment agreement allows you to take longer to repay, and the IRS will evaluate your financial position every two years to see if you are better off. They will include your equity in assets in their calculations. The IRS will also file a federal tax lien to guarantee debt collection.
- Offer in Compromise (Settlement Agreement): It is exceedingly difficult getting an offer in compromise settlement agreement. Even though the IRS would much prefer getting all the money due, when you aren’t in a position to pay, they are bound to offer you this plan.
Call us now to get access to our team of skilled tax professionals who can help you secure an IRS payment plan.