Owe back taxes? Facing wage garnishment? You may have heard about an IRS Installment Agreement but you are unsure of how to proceed. McCauley Law Offices, P.C. can help you negotiate an IRS Installment Agreement that puts your mind at ease and allows you to pay your tax debts in a reasonable way. If you cannot pay your tax debt in one lump sum, then as an alternative you can enter into an IRS Installment Agreement and pay back your debts to the IRS in installments.
Will I have to Deal with Penalties and Interest Fees?
The quick answer is yes. It is advised that you try and pay your tax debt off as soon as possible and well before the end of your IRS installment agreement because you will have to deal with IRS tax debt penalty fees and interest fees which can be between 8% and 10% of your debt per year. There are a few different types of IRS installment agreements: Guaranteed Installment Agreements, Streamlined, Partial Payments, and Non-streamlined. We will cover the differences between each of these IRS installment agreements.
Guaranteed Installment Agreement
You can qualify for a guaranteed installment agreement if you owe less than $10,000 before penalties and interest fees and if in the previous 5 years you have not entered into an installment agreement with the IRS. You must be unable to pay the tax in one lump sum on the date that it is due, or within 120 days. You must agree to pay off your tax debt within 3 years. You must make minimum monthly payments which are calculated by taking the tax liability + interests and fees / divided by 30. The IRS will not file a federal tax lien against you under this installment plan.
Streamlined Installment Agreement
Generally speaking, if you qualify for a guaranteed installment agreement, then you will qualify for a streamlined installment agreement with the IRS. Your tax debt, interest and penalties cannot exceed $50,000, and you must have a way to pay off the balance of your tax debt within 72 months. The payment that you must pay within this installment agreement must be equal to or greater than the minimum acceptable payment. They are considered streamlined because they do not require a financial statement (Form 433-B, Collection Information Statement for Business or Form 433-F, Collection/Information Statement).
With a streamlined installment agreement, you must pay a fee to set it up or pay a reduced fee for a direct debit installment agreement. You will not have to worry about the IRS filing a federal tax lien against you when you enter into this type of agreement.
Partial Payment Installment Agreement
This type of IRS installment agreement allows you to enter into an agreement with IRS for partial payment of your tax liability. You must use Form 433-F to report your income and living expenses. If you have any assets that can be sold to pay some of the tax debt, the IRs will require that provide them with more information. If you your application for this type of installment agreement is approved, then the IRS will require you to participate in a financial review every two years. If your assets or income change, the review may result in increases to your installment payments or the IRS may terminate the agreement with you.
Non-streamlined Installment Agreement
If you owe more than $50,000 then a non-streamlined agreement is an option you can choose. You must negotiate with the IRS prior to entering into this type of agreement with them. McCauley Law Offices, P.C. tax attorneys can negotiate with the IRS on your behalf to acquire a non-streamlined installment agreement. We will help you with the process of filing Form 433-F, the collection information statement and work with you throughout the process of becoming approved for a non-streamlined installment agreement. The IRS can deny your offer of a non-streamlined installment agreement. If you cannot reach an agreement with the IRS, we can work with you to discern the next best option which may be filing an Offer in Compromise.
How do I Make Payments / Pay Installment Agreement Payments?
You can make payments towards your installment agreement in a variety of different ways. Some taxpayers opt to have a payroll deduction taking out. Others choose to pay via direct debit from an account. You can always send a check or money order. The IRS will accept credit cards, and payments via the Electronic Federal Tax Payment System (EFTPS), or an online payment agreement.
Can the IRS End our Agreement once it is approved?
Yes – the IRS can revoke an installment agreement if you miss a payment, or if you do not file a tax return of pay taxes after the agreement is made. If they find that you have not provided them with accurate information on your Form 433-F or if you are paying in a partial installment arrangement and your financial review shows a change in your financial position and ability to pay.
At McCauley Law Offices, P.C., our lawyers will find a solution to your tax problems, no matter how complex your IRS issue is. View our services and contact us (or call 610-388-4474) to schedule a free consultation with one of our tax attorneys. View and purchase Gregory McCauley’s published work “TAXJAMS: Simple Solutions” on Amazon. From our office in Chester County, Pennsylvania, we find tax solutions for clients throughout the country.