If you're unable to pay your entire tax debt upfront, the IRS might offer you the option to settle it gradually through monthly payments within an IRS installment plan.
While the IRS may seem tough and distant to deal with, it's also quite rational and pragmatic. Recognizing the limitation of collecting the taxes, the agency allows taxpayers to chip away at their debt over time as a way of resolving tax issues. This approach often proves to be the most feasible and effective means for the IRS to recover owed funds.
Moreover, since the IRS collects interest on past due amounts, permitting individuals to repay taxes gradually in installments doesn't strain the agency financially.
IRS installment plans, especially the IRS installment plan for debt, frequently present practical solutions that benefit both the IRS and the taxpayer. Although penalties and interest typically apply, mastering the process of initiating an IRS payment plan through successful tax negotiation can guide you toward regaining financial stability and ultimately becoming free from your tax debt.
An IRS installment plan can take two forms: informal or formal. Under an informal arrangement, the taxpayer commits to monthly payments of an agreed-upon sum to clear the balance within two years. On the other hand, a formal installment agreement involves a written contract wherein the taxpayer pledges to make specified monthly payments, and the IRS agrees to accept them. While an informal agreement allows payment allocation, particularly towards the trust fund section of employment taxes, this flexibility doesn’t apply to a formal installment agreement.
For balances ranging from $10,000 to $25,000, the minimum payment is determined by dividing the total amount due by 72. In most cases, IRS collection personnel are reasonable individuals. If an IRS collection employee adjusts a taxpayer’s installment payment at a sum that the taxpayer’s representative believes is too high, the representative can discuss the matter with the collection employee’s manager. If this doesn’t lead to a satisfactory resolution, the representative can take the issue to the IRS appeals office.
Not communicating with the IRS can lead to further action against you, consisting of wage garnishment. Having set up an installment plan for debt keeps you on good terms with the organization, saving you from any further penalties.
In case your credit score took the toll of not unpaid taxes, setting up and sticking with the installment will eventually aid in enhancing your credit score and bring you back to track where they were prior to your audit.
To ensure you receive all federal tax refunds in the future, make sure to maintain an up-to-date balance with the IRS. An installment plan lets you schedule payments, so you always stay up to date by tax season.
In common scenarios, it only takes 15 to 30 minutes to make an initial agreement by phone, then an average of four to six weeks to confirm the direct debit setup. However, sometimes the process can take longer if you can’t pay by direct debit or payroll deduction.
IRS installment plans extend over six years and can be initiated during your tax filing process. To start the process, you can fill out form 9465, the Installment Agreement Request. You can take help from an IRS installment plan expert, such as an IRS installment plan. They can offer valuable guidance. Once the form is submitted, the IRS will establish a structured payment plan based on your circumstances.
The IRS offers several avenues for managing tax debt repayment. At American Tax Settlement, LLC, our team of professionals, including experienced Tax Settlement negotiators specializing in IRS installment plans, aims to devise a payment arrangement that suits your needs. We strive to efficiently clear your tax debt within the designated six-year timeframe and minimize the accrual of interest. Our goal is to ensure that your journey to financial relief is guided by expertise and tailored solutions.
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