Blog

7 Ways IRS Payment Agreements Can Help

Most Americans cannot afford to make a major purchaser – for example, an automobile – without some sort of installment payment agreement to pay off the debt. The Internal Revenue Service recognizes that somewhat similarly, taxpayers may not be able to pay the full amount of federal taxes owed. Under many circumstances, IRS payment agreements can be worked out to handle the situation.

How IRS Payment Agreements Ease Federal Tax Burdens

Many taxpayers find that putting such an IRS installment payment agreement in place makes one’s relationship with the IRS much easier. Here are seven unexpected ways IRS payment agreements may ease your burden with the IRS.

1. The primary advantage of instituting an installment plan is rather obvious: It gives a taxpayer additional time to pay off federal taxes in an orderly manner.
2. Any taxpayer owing no more than $10,000 will have his or her application for an installment payment plan automatically approved by the IRS, providing the taxpayer has “timely filed all income tax returns” and has not entered into an installment payment agreement within the past five years. In addition, a taxpayer must be able to pay the entire outstanding balance within three years.
3. If you owe more than $10,000, your application may not be approved automatically, but you may still qualify for the IRS streamlined installment agreement processing criteria in place through September 2017. Most taxpayers with a balance due of less than $25,000 already meet the criteria. In many cases, an installment agreement can be crafted without the completion of a Collection Information Statement or a determination to file a Notice of Federal Tax Lien.
4. An additional benefit of a streamlined installment agreement is that the IRS will not file a federal tax lien.
5. Eligible individuals can get a six-month extension for filing their tax returns and possibly paying their tax bills if they are under certain financial hardships.
6. While interest and late-payment penalties continue to accrue during the installment period, the late-payment penalty is cut in half for any month that an installment agreement is in effect.
7. If your proposal is approved, then the IRS will ordinarily halt any levies against you. Because you have agreed to settle your debts, you will remain in good standing with the IRS.

The IRS is America’s Toughest Bill Collector

The IRS has a veritable arsenal of enforcement actions to “encourage” taxpayers to pay, including tax liens, levies, and garnishment of wages and other income. In 2015, Congress added IRC § 7345 that allows the IRS to petition the State Department to deny, revoke, or limit a taxpayer’s passport if he or she owes more than $50,000 to the IRS and has not reached an agreement to pay the debt.

Issues with taxes and the IRS can be complicated and frustrating, and the process of negotiating with the IRS can seem hopeless. Recognize, however, that if you have unsettled tax debt, there are options available to you. Many taxpayers discover that having a skilled, experienced tax attorney in their corner can make a significant difference.

Mackay, Caswell & Callahan P.C. – Experienced Tax Attorneys Ready to Help

Do you owe back taxes and are unable to pay them? Would you like to know more about IRS payment agreements? If so, contact one of the Upstate New York tax attorneys or New York City tax attorneys at Mackay, Caswell & Callahan P.C. today. We have offices in Albany, New York City, Rochester, Syracuse, Utica, and Watertown. We have more than 30 years of experience handling all types of tax controversies. We have helped countless taxpayers with issues of back taxes and deficiencies. We also have extensive experience in audit representation, collection defense, civil tax litigation, and criminal tax defense. We are committed to achieving the best results for our clients as efficiently as possible, with straight talk and effective solutions. Call us or contact us using our online form.