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Installment AgreementTax Relief

What You Should Know About IRS Installment Agreements

If you owe taxes to the Internal Revenue Service, you are probably already aware that they are going to be aggressive when trying to collect. That said, it is important to be proactive and find ways to get the tax debt problem solved and the IRS paid.

The Boca Raton tax relief services offered by East Coast Tax Consulting can provide assistance to individuals who are interested in exploring different approaches to resolving their problems related to unpaid taxes. One of the most common approaches is the use of installment agreements.

Installment plans allow back taxes to be paid over time instead of in one lump sum. There are various kinds of installment agreements and it is imperative to know which types you qualify for and which can be the best for your financial situation. When a tax relief service helps you resolve your tax problems, you’ll benefit from professional help in finding the right type of installment agreement.

Types of Installment Agreements

The different kinds of installment agreements include:

Guaranteed Installment Agreements

If your balance due to the IRS is $10,000 or under (excluding penalties and interest), the IRS actually must agree to an installment agreement under certain circumstances. The IRS may reach an installment agreement with you if:

  • You’ll be able to pay off the balance due on the back taxes in 36 months or less
  • You haven’t filed a return late or haven’t paid your taxes late over the five years prior to trying to get an installment agreement
  • You have not had an installment agreement in place during the prior five years
  • You agree that in the future, you will file and pay your taxes on time

As is the case with all installment agreements, interest and penalties continue to accrue during the term of the payment plan.

Streamlined Installment Agreements for $25,000 or Less

If your unpaid balance of taxes, penalties and interest is $25,000 or less, you can pay the amount owed within 72 months (or the time remaining on the statute of limitations on collection). You must be current with your tax filings and there is no need to provide the IRS with your financial information to qualify for a streamlined agreement even if you have the ability to pay the tax in full.

A major benefit of establishing a streamlined agreement is that if the IRS has not previously filed a lien, they won’t do so once you have an agreement. Even if a lien has been filed as a result of your unpaid taxes, it can be withdrawn once three payments have been directly debited from your bank account.

Streamlined Installment Agreements for $25,001 to $50,000

This streamlined agreement is similar to the one above but requires you to have your monthly payments directly debited from your bank account or through payroll deduction. If a lien has been filed prior to setting up the agreement, it can be withdrawn once the balance is down to $25,000.

Non-Streamlined Installment Agreements

Unlike streamlined installment agreements, which are for $50,000 and under and span 72 months, non-streamlined installment agreements are for larger amounts and may have longer repayment periods.

Non-streamlined installment agreements offer greater flexibility, as the balances can be as high as $250,000 and the payment plan can be as long as 120 months, or the time remaining on your collection statute expiration period, whichever is  less. So, if you have eight years left before your collection statute expires, you will make monthly payments over eight years sufficient enough to pay off your tax debt in full.

Similar to streamlined installment agreements, non-streamlined installment agreements do not require you to disclose your financial information to the IRS.  These agreements are simple, with no-strings-attached, as long as you can meet your monthly payments. However,  you can’t set up an non-streamlined agreement if you are assigned to IRS field collections, meaning a revenue officer is handling your case.

There is a downside to the non-streamlined installment plan; the IRS will file a Notice of Federal Tax lien which is a public record of your outstanding tax debt. This could present a problem if you later want to  purchase or sell property, in which case the lien will have to be addressed.

Regular Installment Agreement (Negotiated)

When taxpayers do not qualify for either a guaranteed, streamlined, or non-streamlined installment agreement, it becomes necessary to request a regular installment agreement that is negotiated directly with the IRS.

This requires you to complete a Collection Information Statement and, in many cases, may limit your monthly living expenses to IRS allowable expense guidelines. A federal tax lien is generally filed when a negotiated installment agreement is reached for tax debt payment.

Partial Payment Agreements

If you’re unable to make full payment by the collection statute expiration date but have some ability to pay, the IRS will accept a partial payment installment agreement. This type of agreement is reached after you complete a financial form with the IRS providing details on your assets, income and living expenses.

Payments are based on what you can pay after considering essential costs of living, and the payment term may be longer than with a streamlined or guaranteed installment agreement. The IRS will re-evaluate how much is due every two years to determine if you can pay more. Once you reach the collection statute expiration date, the remaining tax debt is written off and you no longer owe the back taxes. The IRS may also file a federal tax lien to ensure its interests are protected.

In-Business Trust Fund Express Installment Agreements

A business that owes $25,000 or less in payroll taxes may qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA).  The IBTF-Express IA requires that the payroll tax debt be paid within 24 months or prior to the Collection Statute Expiration date, whichever is earlier. A direct debit installment agreement is required if the balance owed is between $10,000 and $25,000. In addition, the business must be current with its filing and payment requirements.

Getting Help From Tax Professionals

If you need to negotiate an  IRS installment agreement, you need the professional tax relief services offered by East Coast Tax Consulting. Call as soon as possible to get an advocate on your side who can help you choose the right type of agreement and deal with the IRS negotiation process on your behalf.  Find out more today.

Contact Us 

You deserve the best in IRS tax representation, tax preparation, and tax planning services. At East Coast Tax Consulting Group, you’ll work with a licensed CPA who will handle your case from beginning to end. We invite you to contact our team to schedule a free, confidential consultation.