Installment Agreements

When the taxpayer owes money to the Internal Revenue Service (IRS) that they are unable to pay in the near future, the taxpayer may be eligible for regular monthly payments per an   installment agreement. The taxpayer can set up an installment agreement with the IRS which will allow the taxpayer to pay off their back taxes over time while remaining in good standing with the taxing authorities. This is a good option for taxpayers that want to pay off their tax debt but do not have enough money to pay it off immediately because it allows the taxpayer to break the amount down into affordable monthly payments. Taxpayers may be able to pay tax debt in full while others may pay an installment agreement and then the remainder of the tax owed will be cleared. Taxpayers tend to like installment agreements because the IRS may reduce certain penalties once the agreement has been accepted, but interest will continue to be charged as you pay off your tax debt. The taxpayer must file any delinquent tax returns before applying for an installment agreement.

The IRS typically has a different plan that involves a higher payment per month than you anticipated. The IRS does not prefer to accept an installment agreement but would rather the taxpayer pay the amount in full. When the IRS agrees to an installment agreement, they will want as much of the tax owed as possible and will look at all possible resources to accomplish this including potentially liquidating assets. Negotiation is part of the installment agreement process and our professionals at LifeCycle Tax and Wealth Management are experienced in this process.

To apply for the installment agreement option, taxpayers must owe the IRS less than $50,000 and be current with tax return filings. Businesses that are applying for an installment agreement cannot owe more than $25,000 in payroll taxes and must also be current with tax return filings. Individuals and businesses may qualify for an installment agreement if less than $100,000 is owed and the taxpayer can pay it in 120 days or less.

If you have questions or would like LifeCycle Tax and Wealth Management to file IRS Form 9465 on your behalf, feel free to contact our office today.