There are two types of simplified installment agreements, depending on how much you owe and for what type of tax. For both types, you must pay the debt in full within 72 months (six years) and within the deadline for the IRS to collect the tax, but you won't need to file a financial statement. Not being able to pay the taxes you owe to the IRS is stressful and it can be difficult to choose which option is best for settling your balance. For many taxpayers, an installment agreement is an attractive option.
With an installment agreement, you can pay outstanding taxes in smaller amounts each month, making the payment more affordable. If you're interested in getting an installment agreement, Polston Tax can help. In general, you can choose what you pay each month. That is, the IRS will ask you how much you can pay.
However, if you have a long-term repayment plan, you should choose a payment amount that pays off your debt within 72 months. Applicants must submit the form to the IRS within 30 days from the date of their letter of acceptance of the installment agreement to ask the IRS to reconsider their status. A transaction offer is an IRS agreement that is used to resolve your tax liability through an agreed agreement that is less than the amount of tax owed. The interest rate applied to late tax payments differs substantially when you have an installment agreement with the IRS.
File all required tax returns on time and pay all taxes in full and on time (contact the IRS to change your current agreement if you are unable to do so). Many people who can't pay the balance in full right away will sign an installment agreement with the IRS. You may not be able to make any payments to the IRS (that's OK, too). The IRS has a financial hardship program that places a debt in bad condition.
If the IRS system identifies you as a low-income taxpayer, the online payment agreement tool will automatically reflect the applicable rate. If you're not eligible for a payment plan through the online payment agreement tool, you may still be able to pay in installments. Submit your request online through the online payment agreement tool or by phone or by mail by submitting Form 9465, Request for an Installment Agreement. An IRS payment plan is an agreement that you make directly with the agency to pay your federal tax bill for a specified period of time.
These plans require much less paperwork than installment agreements that require you to submit documents that prove your ability to pay. The Office of Management and Budget has directed federal agencies to charge users fees for services such as the installment agreement program. As part of its Fresh Start program, the IRS recently adopted new rules that make it easier to obtain an installment agreement. A concern that my clients frequently express is whether entering into an installment agreement with the IRS automatically extends the time the IRS has to collect.
The interest rate on unpaid taxes varies depending on whether or not you have an installment agreement and whether or not you file it on time. The initial cost of setting up an installment agreement varies depending on the type of installment agreement, the way the agreement is set up, and the payment options you choose.
