installment agreement relief can help resolve your tax debt problems.
Your financial situation is different from someone else. The tax debt relief service that works for someone may not be the best choice for someone else. You should take the time to understand all the debt relief options available to you to find the best solution for your needs and goals.
Installment Agreement Tax Debt Relief Guide Locator
What Is Installment Agreement Tax Relief
If you are unable to fully pay your tax burden, the Internal Revenue Service (IRS) allows taxpayers to pay off tax debt through an Installment Agreement (IA). The IA is a tax debt relief program where you can pay off your tax balance over time, but with stringent payment requirements. However, because interest and penalties will apply, the IRS encourages taxpayers to pay taxes immediately. Interest and penalties can equal 8% to 10% per year.
Types Of Installment Agreement Tax Relief
The IRS has four different types of Installment Agreements: guaranteed, streamlined, partial payment, and non-streamlined. Both guaranteed and streamlined IAs are full repayment plans, under $50,000 in tax debt, do not require detailed information of your income and assets, and the IRS does NOT file a federal tax lien against you. Payments are fixed monthly installments through Direct Debit. Your specific financial situation will determine which IRS tax payment plan you qualify for.
Guaranteed Installment Agreement
guaranteed installment agreement
Guaranteed Installment Agreement – Taxpayer Conditions:
- Owes less than $10,000 (not including interest and penalties);
- 5 years of filed tax returns, paid taxes owed, and has not entered into an installment agreement;
- Unable to pay the tax debt when due or within 120 days;
- Tax debt will be paid off within three years;
- Must pay at least the minimum monthly payment (tax liability, interest, and penalties divided by 30).
You must pay a fee to set up the installment agreement or a reduced fee for a direct debit installment agreement. The IRS does not file a federal tax lien.
Streamlined Installment Agreement
streamlined installment agreement
Streamlined Installment Agreement – Taxpayer Conditions:
- Owes less than $50,000 (including interest and penalties);
- 5 years of filed tax returns, paid taxes owed, and has not entered into an installment agreement;
- Tax debt will be paid off with six years;
- Must pay at least the minimum monthly payment (tax liability, interest, and penalties divided by 50).
You must pay a fee to set up the installment agreement or a reduced fee for a direct debit installment agreement. Like a guaranteed installment agreement, the IRS does not file a federal tax lien.
What Else Should I Know?
The IRS has the right to review your account status for any reason at any time. Since you owe money to the IRS they have the right to determine if your financial situation has changed. Denying the IRS a request for a new collection information statement will increase their curiosity and should be avoided.[/vc_column_text][/vc_row]
Partial Payment Installment Agreement
partial payment installment agreement
A partial payment agreement allows the IRS to enter into agreements with you for the partial payment of a tax liability. To qualify for this arrangement, you must complete a financial statement using Form 433-F, Collection Information Statement to report income and living expenses. The IRS will review and verify the information. If you have assets that can be sold to pay some of the tax debt, the IRS will require you to provide additional information.
If approved, you will be required to participate in a financial review every two years. This review may result in the increase in installment payments or the termination of the agreement.
The information that you will need to prepare in advance of your IA application include:
- All income and living expenses.
- All assets and their market values.
- Bank statements from the last three months.
- Proof of any out-of-pocket medical expenses.
Non-Streamlined Partial Payment
non-streamlined partial payment installment agreement
If you owe $50,000 or more and can make monthly payments to the IRS, a non-streamlined agreement is an option. The IRS will not automatically approve this agreement; instead, you must negotiate with the IRS. You must file Form 433-F, Collection Information Statement. This form collects information about income, debts, living expenses, assets, accounts, and allows you to propose an installment payment amount.
It will usually take a few months for the IRS to review a proposed payment plan. The IRS may refuse a proposed agreement if it considers some of your living expenses unnecessary, if untruthful information was provided, or if you failed to complete a prior installment arrangement.
The information that you will need to prepare in advance of your IA application include:
- All income and living expenses.
- All assets and their market values.
- Bank statements from the last three months.
- Proof of any out-of-pocket medical expenses.
Thoughts On Installment Agreement
The Installment Agreement is a tax debt relief program where you can pay off your tax balance over time, but with stringent payment requirements.
The IRS can revoke an Installment Agreement under the following circumstances:
- The taxpayer misses a payment;
- The taxpayer does not file a tax return or pay taxes after the agreement is entered into;
- The taxpayer provided inaccurate information on Form 433-F; or
- The taxpayer is paying under a partial payment installment agreement and a review indicates a change in financial status.
Getting IRS approval for an non-streamlined IA is a challenging task. It is strongly recommended that you have professional advice and representation when dealing with the IRS.
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