When there is a significant amount owed in IRS payments, the taxpayer may opt for IRS installment agreements to maintain regular payments until the total amount clears. This option provides a comfortable payment plan for those who owe taxes.
What Is An IRS Installment Plan?
It is an IRS payment arrangement that allows the taxpayer to pay their tax bill over 3-6 years. This payment plan is ideal for those who owe less than $50,000 ($25,000 for businesses) in taxes, as realistically, these individuals should be able to complete full payment at this time. To utilize this payment method, the taxpayer can fill in a 9465 form stating the amount that they can afford to pay each month and submit this alongside their income tax return.
How You Benefit from an IRS Installment Plan
- An IRS payment arrangement is a long-term payment solution allows the taxpayer time to raise the money needed to pay their tax bill.
- As a knock-on effect, this allows the taxpayer to maintain payment of other unrelated bills and make minimal alterations to their lifestyle to accommodate for this extra monthly payment. This can help to reduce long-term financial strain.
- If for some reason the taxpayer is unable to keep up with their IRS payment plan, as they initially chose to opt into the plan, only half of the usual Failure to Pay IRS penalty is due.
- If the taxpayer is up to date with their tax filings and owes less than $50,000, they are automatically eligible to apply for an IRS payment arrangement also known as installation agreements.
- If the taxpayer owes $10,000 or less and fulfills specific criteria, their application must be accepted.
- The application process is simple and once submitted, the IRS will halt payment collection. Consult a tax specialist for assistance.
- If for some reason the application is rejected, the taxpayer will have a period of 30 days before payment is due.
- If the application is accepted and as long the taxpayer keeps up to date on all of their payments and future tax obligations, the IRS will not pursue any further collection actions throughout the life of the installment agreement.
If you opt for an IRS payment arrangement, always ensure that payment arrangements are made directly with the IRS. There have recently been some complaints about scams whereby taxpayers get contacted by scammers posing as the IRS in an attempt to steal money. Learn the steps of recognizing IRS scam to ensure that you don’t fall victim to this.
The Right Financial Solution
Although an IRS payment arrangement can provide relief to those who would otherwise struggle to pay their tax bill, it is important to remember that the longer you take to pay your bill, the more interest you will accrue. IRS Solver is a team of highly professional tax specialists that provide tax information and a tax resolution service to their clients. IRS Solver can help you to decide which tax repayment method is most suited to your financial situation.