What Is an IRS Installment Agreement
However, the IRS will continue to charge penalties and interest on your account until it is paid in full. There are many payment options for an Installment Agreementwith the IRS and it mainly depends on the balance you owe. A payment plan can either be put in place for a long-term (120 days or more) or a short-term (120 days or less) period.
What Is A Guaranteed Installment Agreement?
This will allow for the full amount of the liability to be paid over three years. If you chose to pay it off sooner, then you are more than welcome to. The IRS will never deny you from making extra voluntary payments outside of your agreement. Payments can be mailed into the Service by check or money order or made online with a credit card at any time. The major advantage of this type of payment plan is that the IRS will not file a Federal Tax Lien against you. They are unable to issue a levy on your wages or assets either.
What Is A Streamlined Installment Agreement?
The payment can vary based on numerous factors of your account.The advantage of A streamlined Installment Agreement is that it can be paid over many terms. The terms can range from 60 to 84 months. These terms will never go over your Collection Statute Expiration Dates, or CSED’s. A CSED is the expiration date placed on each year that a balance is due. Once this date is reached, the IRS can no longer legally try to collect from you.
What Is a PPIA?
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 amount on a monthly basis that you can afford after all income is reported and all expenses are accounted for. This is called your net discretionary income. You will also be required to provide the IRS with full financial info. This will require a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals to be sent with your request.
What Is Form 433-A?
What Is IRS DDIA?
What Is OPA?
Can You Choose A Payment Due Date?
It would be best to consult with a tax expert before sending in your financial info. Before 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 IRS Levy on your bank account or wages to collect the entire amount that is due.
What Steps Do You Take To Make Payments?
A Regular direct debit installment agreement has a fee of $107. If the IRS determines that you are a low-income taxpayer, this fee can be reduced to $43. To qualify as a low-income taxpayer your income must be at 250% of the Federal Poverty Line. Your reduced fee will be granted regardless of the method used with your request. If you chose to use the online payment agreement to set up the installment agreement the onetime fee is $149. For a Direct debit online payment agreement, the user fee would be $31. If there is a time that your agreement needs to be restructured or reinstated, you will be charged an additional one-time fee of $89.