Tax Installment Agreement: Getting a Deal Done

Whenever a taxpayer has a back tax problem, they must make sure that they deal with it right away. The first IRS program that many people go to is the Offer in Compromise program. But considering that approximately 85% of taxpayers with back tax issues do not qualify for an offer in compromise, negotiating an installment agreement may be the next best thing.

The installment agreement process is much easier to complete than an offer in compromise. The installment agreement allows the IRS to set a monthly payment plan with the taxpayer that is determined by examining the taxpayer’s liability and comparing that to how much they can afford to pay on a monthly basis.

Installment payments must be paid timely and to the proper address. Don’t fall behind on your installment payments, as this is an agreement between you and the IRS. If you don’t fulfill your end of the agreement the IRS will instigate collection procedures again. It will be more challenging to negotiate an agreement the next time.

Just make sure that before you initiate an agreement you make sure that you are current on all income tax filings. The IRS will certainly make this a condition of the agreement and you won’t have much of a choice in the matter.

By aggressively negotiating with the IRS and working diligently, most taxpayers with back tax issues can reach an installment agreement. The goal is to make sure that you get an agreement that works within your financial budge

IRS Installment Agreement: What You Have To Know

One of the main functions of the IRS is to assess and collect all federal income taxes due. The IRS has substantial authority and power that was given to it by Congress to carry out its goals. With these powers and the substantial financial resources that have been assigned, the IRS is essentially the world’s largest and most powerful collection agency.

However, the IRS cannot unjustly harass taxpayers or create any unreasonable financial hardship during the collection process. The agency most work within the framework with which Congress has designated. Within this framework there are several programs that assist taxpayers with back tax issues.

One of the most popular programs is the IRS Installment Agreement. This program allows the IRS to establish a monthly payment plan with the taxpayer that is based on the taxpayer’s tax liability and how much they can afford to pay in monthly installments.

When establishing an IRS installment agreement, the IRS may require disclosure of the taxpayer’s financial position. There are also other conditions that must be kept once the IRS installment agreement is established such as being compliant with future income tax filings and making timely tax payments.

If the taxpayer cannot pay his or her entire tax liability and does not qualify for an offer in compromise or a currently not collectible status, an installment agreement may be the next best choice. If the balance that is owed is less than $25,000 the process becomes a lot easier and the IRS generally has a great willingness to get it completed.

The agency will only enter into an IRS installment agreement once the taxpayer has filed all of his or her necessary federal income tax returns. Depending on the situation, the IRS may file a Notice of Federal Tax Lien to protect the interest until the tax liability is paid in full.

Dealing with the IRS can be a challenge for the individual taxpayer. Often, it is in the taxpayer’s best interest to get help from a CPA or an experienced tax lawyer to ensure they get the best possible relief to their IRS tax problems

Installment Agreement Request Form

Many taxpayers are facing back tax issues, especially considering the financial situation of today’s economy. So the question often arises – how do I get an installment agreement request form? But once you get the request form, how do you complete it and what information do you need to include to make sure that it is successful?

Before the IRS will agree to an installment agreement, the agency will do a financial review of the individual taxpayer’s financial position. The goal is to determine the collection potential of the taxpayer’s account.

Often the taxpayer gets a monthly payment that is greater than what they can afford. This can result in a default under the agreement. If this occurs, the IRS will restart the collection process all over again. Hence, the taxpayer needs to make sure that they get an affordable agreement established upfront. The assistance of a tax professional can greatly improve the taxpayer’s chances of getting an affordable agreement.

As you go through the installment agreement process, you must remember that this is a contract between you and the IRS. The IRS certainly expects you to keep up your end of the bargain and make your payments on a timely basis.

The advantage to the installment agreement request form is that it will put an end to any collection efforts that the IRS was undertaking. This includes tax liens, levies, garnishments, and collection calls. But interest and penalties will continue to accrue on any unpaid balance throughout the entire installment period.

IRS Form 9465: Successful Tips For Completing Form 9465

Resolving IRS tax issues is not for everybody.  It can be a tremendous challenge to deal with the IRS, but there are many programs designed to resolve IRS tax problems. Most of these programs take plenty of time to complete all the required forms and to prepare the due diligence on all the required financial disclosures and profit and loss statements. The reality is that many taxpayers just don’t have the time, knowledge or patience to do it all by themselves.

If bankruptcy or an offer in compromise is not an option, a taxpayer should consider an installment agreement. When trying to establish an agreement, the taxpayer must have reasonable negotiating skills. The IRS wants to collect the entire balance due as soon as possible, while the taxpayer is in need of a payment that works within their budget and that does not cripple them financially.

Once you have completed Form 9465 and have an agreement in place, the IRS will suspend all collection efforts and will not issue any bank levies, wage garnishments, or send additional collection notices. But you must remember that even if you are on an installment agreement, penalties and interest will continue to accrue on the unpaid amount of the back tax liability throughout the duration of the installment agreement.

Just realize that in order to obtain an agreement, the taxpayer must be current on all tax filings. If you have not filed your tax returns there is no way to know for sure how much you owe and what your penalties and interest may amount to.

Navigating Form 9465 and the installment agreement process can be difficult. You need to have patience and diligence. But with the help of a tax professional you can make sure that you get an installment agreement that works within your budget.

Payment Options For An Offer In Compromise

Of the three types of payment options for an Offer in Compromise, the Short Term Periodic Payment Offer provides the best compromise in the event that an individual cannot afford to pay the full tax liability in the limited time frame a Cash Offer entails. Rather than 150 days, the taxpayer is expected to deposit monthly payments over the course of two years.

The downside, unfortunately is that the IRS extends the collection potential time frame, as well, from 48 months to 60 months, increasing the value calculated for monthly surplus income from four years to five. To compare then, if an individual is deemed to have $50 of additional income each month, then taking the Short Term Periodic Payment route would increase the least collectible income by $1,100. But again, the taxpayer is benefited by the additional time in which they must pay the full tax liability. For this reason, individuals with low net incomes are advised to consider this type of payment, since the lower the net income, the lower the additional cost.

Another contrast to the Cash Offer in Compromise is the initial payment that is to be included with the processing fee, which is the first Offer payment, rather than 20% of the total offer. The IRS expects monthly payments to continue, as set out in the Offer, while the IRS takes the Offer into consideration, and these count as the first payments of the 24 installments, should the Offer be accepted. In the event of a rejection, the payments count against the individual’s longest standing tax debt, but cannot be refunded.

IRS Installment Payment Plans

Whenever a taxpayer has a back tax problem, they must make sure that they deal with it right away. The first IRS program that many people go to is the Offer in Compromise program. But considering that approximately 85% of taxpayers with back tax issues do not qualify for an offer in compromise, negotiating an installment agreement may be the next best thing.

The installment agreement process is much easier to complete than an offer in compromise. The installment agreement allows the IRS to set a monthly payment plan with the taxpayer that is determined by examining the taxpayer’s liability and comparing that to how much they can afford to pay on a monthly basis.

Installment payments must be paid timely and to the proper address. Don’t fall behind on your installment payments, as this is an agreement between you and the IRS. If you don’t fulfill your end of the agreement the IRS will instigate collection procedures again. It will be more challenging to negotiate an agreement the next time.

Just make sure that before you initiate an agreement you make sure that you are current on all income tax filings. The IRS will certainly make this a condition of the agreement and you won’t have much of a choice in the matter.

By aggressively negotiating with the IRS and working diligently, most taxpayers with back tax issues can reach an installment agreement. The goal is to make sure that you get an agreement that works within your financial budget.