Tax debt is a common and cumbersome issue for taxpayers. If you cannot pay your tax bill in full, there are some options. IRS installment agreements are viable but complex options for taxpayers. You can set up a plan with the IRS directly or contact a professional. Because this situation is complicated, many taxpayers look for expert assistance.

What Is an IRS Payment Plan?

An IRS installment agreement is a monthly payment plan for taxpayers whose owed taxes are unpayable due to circumstances like job loss, insufficient salary and other qualifying reasons. It’s a long-term payment plan that can sometimes take taxpayers 10 years to pay in full. Typically, around 90% of taxpayers are eligible for this kind of payment plan.

There are potential associated costs with a payment plan. Setting one up requires specific fees, so you may still have to pay extra. The plan will also accrue interest the longer it remains unpaid. There are financial penalties for missing deadlines. It is important to consider these consequences before choosing a payment plan, as paying in full during tax season may cost less in the long run.

Taxpayers must meet some criteria to qualify for an IRS payment plan. Individuals with $50,000 or less in assessed interest, penalties and taxes are typically eligible, while businesses range from $25,000 to $50,000. Complications arise when the amount is outstanding or insufficient for the IRS to consider it unpayable, which can result in a denial that requires more careful procedures.

The taxpayer must also comply with all tax filing regulations, as errors and disorganization can lead to unnecessary issues. It is a good idea to have all tax documents organized when considering applying for an installment agreement. The IRS works better with taxpayers who can provide all necessary documentation up front. The process sometimes goes faster, as well.

Who Can Help You With an Installment Agreement

Finding a firm that can help you with an installment agreement is an important process. There are plenty of financial professionals who assist clients with IRS installment agreements, such as Polston Tax. Polston Tax is a tax resolution and accounting firm that offers free consultations and helps with obtaining IRS installment agreements. It has solutions for your unique situation, tailoring plans to your personal circumstances.

Additionally, its consultation requests are entirely confidential. Polston Tax demonstrates extensive experience with tax-related matters, reducing liens and wage garnishments. A lien is an asset you possess, and a wage garnishment is when your employer withholds a portion of your salary to pay an outstanding debt. It is helpful to limit these expenditures as much as possible.

Polston Tax can assist you with audits if you’re under investigation or want to know what the IRS could find if it conducts an audit. Businesses are more likely to need audit help than individuals. The team consists of tax attorneys, case managers, tax preparers and accountants to provide a comprehensive process for your peace of mind.

Since 2001, Polston Tax has offered tax and finance services beyond just IRS installment agreements. It has multiple resources on its website to inform clients on new regulations in the tax world and any other helpful information that directly impacts them. The firm has five offices nationwide and helps negotiate penalty abatements, offers-in-compromise and other tax proceedings.

Working with a trustworthy tax firm can help you make an informed decision about your installment agreement, offering expertise and advice you may not otherwise consider. There are plenty to choose from, offering unique features and perks tailored to taxpayers with different situations. Careful research can help you determine the best fit.

What if You Default on Your Installment Agreement?

Taxpayers who default on their installment agreements should receive a CP523 or similar notice from the IRS. These inform you that your agreement will end, and that the IRS will seize any available assets. While this can be scary, you can have your agreement reinstated with proper documentation and legal procedures.

However, receiving a notice can affect any future negotiations with the IRS, so avoiding one is ideal. A financial professional can help you navigate this complex situation by examining your situation and providing advice based on their expertise and experience in the tax installment field.

Options Beyond Installment Agreements

Installment agreements are not the ideal avenue for everyone. If you are looking for options beyond IRS installment agreements, there are a few others for taxpayers with extreme circumstances.

Offer-in-Compromise

An offer-in-compromise is available to taxpayers who cannot pay back their taxes within the 10-year limit. It goes beyond IRS payment plans because long-term plans are unsuitable for the taxpayer, as well. Potential qualifiers can demonstrate this clearly to the IRS, and they may settle the tax debt for less than the full amount owed. This is an extreme circumstance, so it is important to check whether the taxpayer qualifies before considering it.

Currently Not Collectable Status

Currently Not Collectable status is for taxpayers experiencing severe financial hardship. They can demonstrate to the IRS that they do not have enough income to pay their own reasonable living expenses, let alone tax payments. This is a temporary status where the IRS halts collection activity.

However, the amount continues to accrue interest the longer it remains unpaid. Once the taxpayer starts receiving income, the IRS will reevaluate the status and eventually ask them to resume paying their tax debt. Ideally, the taxpayer will acquire a source of income so they can start paying the amount before significant interest accrues.

Ignoring the Payment Is Not Beneficial

If you cannot afford your tax payment, it can feel overwhelming. Some taxpayers ignore the issue, leading to additional penalties or a seizure of assets. These consequences accumulate over time and become a larger issue the longer they go unaddressed.

It is not a good idea to avoid the situation and its accompanying expenses. Working with a tax professional can alleviate some of that worry and provide a solid game plan for the future.

Apply for an IRS Installment Agreement

Taxpayers who adopt a strategic approach when applying for an IRS installment agreement are generally better equipped to navigate the complex process and meet the specific qualifying criteria. Professional guidance is usually ideal for helping taxpayers avoid common pitfalls and ensure they do not overlook important documents or considerations. Financial professionals who understand the agreement's terms can determine whether it is a viable option.