When you discover yourself in a tax situation with the Internal Revenue Service the first notice you will receive is a request of payment for the entire tax debt in full. This request usually comes with a miniscule amount of time permitted for you to make that payment. If you are like the majority of taxpayers and are incapable of paying your taxes, you may qualify for relief through an Installment Agreement with the Internal Revenue Service. Setting up a monthly payment plan with the Internal Revenue Service is one of the easiest ways to comply with the Internal Revenue Service and pay your past due federal tax. When you are assigned with an Installment Agreement, all extra collection actions – such as bank levies, wage garnishments or property seizure– will cease. However, the Internal Revenue Service will persistently charge penalties and interest on your account until it is paid in full. There are numerous payment options for an Installment Agreement with the Internal Revenue Service and it mainly depends on the balance you owe. A payment plan can be established over a long-term (120 days or more) or a short-term (120 days or less) period. You can only have one Installment Agreement on your account at a time.

First, it is necessary to discover how much capital you are obligated to in unpaid taxes. You can acquire this information from your tax return, or you can call the Internal Revenue Service. Based on the balance that is due, it will facilitate determining which type of an Installment Agreement you will qualify for. If you owe less than $10,000 to the Internal Revenue Service, then you can establish a guaranteed installment agreement. This indicates that it is guaranteed you will receive a payment plan. You will not have to submit any financial information to do so.  You must not have been entered into a similar agreement within the preceding five years. When preparing this request, you must agree to file and pay all your tax returns in the future timely. Mainly, the monthly payment amount that the Internal Revenue Service will accept is determined by taking the total amount you owe, with penalties and interest factored in, and then dividing that aggregate amount by 36 months. This will allow for the full amount of the liability to be paid over three years. If you decided to pay it off sooner, then you are more than welcome to. The Internal Revenue Service will never disallow you from making additional voluntary payments outside of your agreement. Payments can be transmitted into the Service by check or money order or made online with a credit card at any time. The general advantage of this type of payment plan is that the Internal Revenue Service will not administer a Federal Tax Lien against you. They are unable to issue a levy on your wages or assets either.

If you owe $100,000 or less in federal taxes on an individual taxpayer’s account or $25,000 or less in federal taxes for a business taxpayer’s accounts, you may qualify for a Streamlined Installment Agreement. This opportunity for a payment arrangement allows you to move forward with setting up a monthly payment without providing any financial information. Minimal disclosure with such a significant balance due will give you the ease of paying back the Internal Revenue Service without exposing your income or assets. You must agree to the minimum monthly payments that are required. The agreement must also be set up on a direct debit, which means a Form 433-D must be forwarded with your request. The minimum required payment is calculated through the Internal Revenue Services’ computer system. The payment can fluctuate based on numerous factors of your account. The advantage of A streamlined Installment Agreement is that it can be paid over several terms. The terms can range from 60 to 84 months. These terms will never surpass your Collection Statute Expiration Dates, or CSED’s. A CSED is the expiration date assigned on each year that a balance is due. Once this date is reached, the IRS can no longer legally attempt to financially collect from you.

If you cannot afford the minimum monthly payments of a Streamlined Installment Agreement, then you may want to consider a partial payment installment Agreement. A partial payment installment agreement (PPIA) will establish payments to the IRS based on your financial status. The payments are derived from the leftover quantity, on a monthly basis, that you can afford following all income being reported and all expenses accounted for. This is recognized as your net discretionary income. You will also be required to provide the IRS with full financial information. This will require a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals to be forwarded with your request. A Form 433-A lists all your assets, income and expenses. Assets would include boats, homes, cars, bank accounts, etc. If it shows that there is equity in your assets, then the IRS may request for you to sell the asset or attempt to borrow against it. The idea behind this request is to use the equity you have to pay your tax bill with the IRS. The IRS will try and secure any funds they can before agreeing to a partial pay Installment Agreement. Keep in mind that under this type of agreement, the IRS will look at your financial info every two years. If the IRS sees that your income or ability to pay has increased, they will review your account and expect that you increase your monthly payments as well.

Income taxpayers who have a total balance of less than $25,000 and set their monthly payments up on a direct debit installment agreement, or DDIA, can request to have liens that were already filed, withdrawn. This request can be made after three consecutive monthly payments have come out of the bank. If you are trying to avoid the Federal Liens from being filed entirely, there are other options. The Internal Revenue Service has expanded their criteria and will now only place a lien on a tax debt balance that is $50,000 or more. If you have a balance that is $25,000 to $50,000 and do not place the payment plan on a direct debit or payroll deduction payment method, liens will be filed. They can be avoided by sending in a Form 433-D, Direct debit or Form 2159, Payroll deduction agreement. Each case is determined individually.

To request an Installment Agreement with the Internal Revenue Service you must make sure that your account is up to date with the filing of all tax returns. If there are any tax returns missing, they must be filed immediately. Your request for an Installment Agreement can be done using the IRS Online Payment Agreement (OPA), mailing in Form 9465, Installment Agreement Request, or by calling the Internal Revenue Service. Applying for a short-term payment plan Installment Agreement online can save a lot of hold time, which can be expected, when you call in. If your balance is above the $100,000 threshold and financials are needed, then you cannot apply online for a payment plan. All requests for that amount of a tax balance must be made by mailing in the required forms or by calling the IRS. It would be best to consult with a tax specialist before submitting your financial information. Prior To submitting the request, you must choose a payment due date that is between the 1st and the 28th. This will become the date your payment is due every month. If a late or missed payment should occur, you will be at risk for defaulting the Installment Agreement. Once the plan defaults, you will be open for collection enforcement action to take place. These actions can cause Notice of Federal Tax Lien being filed or an Internal Revenue Service Levy on your bank account or wages to collect the entire amount that is due.

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