If you do not qualify for an Offer in Compromise an installment agreement may be an alternative. An Installment Agreement with the Internal Revenue Service (IRS) allows you to pay your tax debt in smaller, more manageable amounts. Installment Agreements generally require equal monthly payments, however, in special circumstance that may be modified. The amount of your installment payments and the number you make will be based on the amount you owe and your ability to pay. As with most loans, the IRS will charge interest and penalties on the unpaid portion of the debt.
In-Business Trust Fund Express Installment Agreements
To qualify for an In-Business Trust Fund Express Installment Agreements with the IRS the business must owe $25,000 or less at the time the installment agreement is established. The tax debt must be full paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier. The payment must be made via direct debit. In addition, you must be compliant with all filing and payment requirements.
Guaranteed Installment Agreements
The IRS is required to agree to an installment plan if your balance due is $10,000 or less and you meet all of the following criteria:
- owe income tax only of $10,000 or less (excluding penalties and interest);
- have not failed to file any income tax returns or to pay any tax shown on such returns during any of the preceding five taxable years;
- cannot pay the tax immediately;
- agree to fully pay the tax liability within 3 years;
- agree to file and pay all tax returns during the term of the agreement; and
- have not entered into an installment agreement during any of the preceding five taxable years.
Generally, the IRS will not file a federal tax lien. The IRS will also not ask you to fill out a financial statement in an effort to analyze your current financial situation.
Streamlined Installment Agreements for individuals
Under the IRS’s new Fresh Start initiative, the maximum dollar criteria for streamlined Installment Agreements has been raised from $25,000 to $50,000 and the maximum term has been raised from 60 months to 72 months. Streamline Installment Agreements generally do not require a financial statement. The Streamlined Installment Agreement criteria is divided into two categories, balance due of $25,000 or less, and balance due $25,001 to $50,000.
Non-Streamlined Installment Agreements
Taxpayers seeking Installment Agreements exceeding $50,000 will still need to supply the IRS with a Collection Information Statement. If full payment cannot be achieved by the Collection Statute Expiration Date, and you have some ability to pay, the IRS may grant a partial payment installment agreements may be granted. During the course of agreements, penalties and interest continue to accrue. Generally, no levies may be served during installment agreements.
When you are ready to learn more about what we can do for you, we encourage you to contact us.