Installment Agreement

Installment Agreement
An Installment Agreement is a payment arrangement whereby the government allows a taxpayer to pay liabilities over time. Once a payment plan is established, the IRS will not take enforced collection action, including the levy of bank accounts or wages, as long as the taxpayer remains current with all filing and payment obligations. However, interest and penalties would continue to accrue until the outstanding balance is satisfied. Additionally, a tax lien may be filed as part of the terms of the installment payment agreement, depending on the amount of the total liability.
Whether the IRS is demanding full payment up-front or a payment plan that is substantially higher than what you can afford to pay, we can negotiate to set up an arrangement for the lowest possible monthly payment and also provide you with various options for making those payments, including via the Electronic Federal Tax Payment System, direct debit, payroll deduction, credit card, and payment by check or money order. Since the government will not agree to an installment agreement until all necessary tax returns are filed, we can also prepare and file any and all returns to bring you into compliance before arranging a payment plan.

The IRS makes various Installment Agreement programs available to taxpayers, such as:

• - Streamlined Installment Agreement: For taxpayers who have a tax debt under $25,000, a simple Streamlined Installment Agreement can be applied for with IRS Form 9465. Payments for this agreement will be calculated using a 72-month payment plan, or divided by the months left in the Statute of Limitations for the debt, if less than 6 years.
• - Fresh Start Streamlined Installment Agreement: An extension of the Streamlined Installment Agreement, this program is for taxpayers who owe between $25,001 and $50,000. Limited financial information may be required due to the higher debt amount involved. Payments are calculated in the same manner as the Streamlined Installment agreement.
• - Partial Payment Installment Agreement: This program was introduced in 2005 as a partial settlement/payment plan for taxpayers who owe more than they can pay before their Statute of Limitations expires. Taxpayers will need to provide documented proof of their inability to pay, as well as a letter explaining their current financial situation. The IRS will determine, through a full disclosure of financial documents, the monthly payment amounts. Once the terms of the Partial Payment Agreement are fulfilled, the remainder of the tax debt is forgiven.
  Tiered Installment Agreement: For taxpayers who owe less than $25,000 and have temporary financial difficulty paying their tax debt, a Tiered Installment Agreement is suggested. With this program, the IRS will set low monthly payments for the first year of the agreement, with the payments increasing over time until the agreed pay-off amount is reached.

After taxpayers have decided to choose an Installment Agreement to pay their back taxes, they need to choose a method of payment. Methods of paying an Installment Agreement include:

• - Personal or business checks, money orders, or certified funds
• - Payroll deductions from your employer
• - Electronic transfers from your bank account
• - Direct Debit
• - Online Payments

Taxpayers need to know that until their tax debt is paid in full or the Statute of Limitations expires, their future refunds will be applied to their tax debt.
When you are ready for help, give us a call today. With our guidance, you can secure a settlement quickly and efficiently that can result in you paying the lowest tax possible.