Installment Agreements
Installment Agreements are the most common resolution to all IRS problems. These can be extremely simple to complete, or, somewhat difficult, depending on the total amount owed.
If your total outstanding tax debt is less than $10,000, the IRS is required to allow you to enter into an Installment Agreement , provided that you have not failed to file any tax returns or already entered into an Installment Agreement, on which you defaulted. However, the amount you offer to pay per month must be enough to pay the entire debt in three (3) years. There is no financial statement required for these simplified versions, which is a big time-saver.
If the total amount you owe to the IRS is over $10,000, but less than $25,000, the IRS will generally allow an Installment Agreement, provided that you can pay the entire amount off in five (5) years. While there is normally no financial statement required for these, either, the IRS may require at least a Form 433-F Financial Statement.
Negotiated Installment Agreements may be used to pay-off IRS debts totaling more than $25,000. In this situation, the IRS will require at least a Form 433-F. However, they may require the more detailed Form 433-A, generally if the total exceeds $50,000. You will be required to make monthly payments equal to an amount which will ensure that the total is paid-off in five (5) years. Also, since the Statute of Limitations on collection of taxes is ten (10) years, the IRS may require you to extend that period, if your Installment Agreement will not be completed when the existing limitation expires.
In using any Installment Agreement, regardless of the amount you owe, remember to only agree to a monthly payment that you know you can afford. And, be conservative. When a client tells me what they can pay per month, I generally reduce that amount by 25%. The consequences for agreeing to pay more than your finances allow can be extremely detrimental, since it is nearly impossible to convince the IRS to re-negotiate an existing Installment Agreement.
Topics
Hardship/Currently-Not-Collectible Status
Hiring an IRS Representative
Innocent Spouse Relief
Installment Agreements
Liens and Levies
Offers In Compromise
Payroll Taxes and the Trust Fund Penalty (TFP)
Payroll Withholding Taxes
Substitute for Return (SFR)
Recent Updates
December 21, 2007
Payroll Taxes and the Trust Fund Penalty (TFP)
December 20, 2007
Substitute for Return (SFR)
