Installment Agreements
It can be really scary to know you have a big tax bill and no way to pay it. Most people don’t have large amounts of money just sitting around, and few people facing unpaid taxes are able to just write a check to cover what they owe. People, for the most part, pay taxes when they can afford to do so.
Fortunately, Congress wrote installment agreements into the Internal Revenue Code because they understood that most taxpayers, even though they’re earning an income, aren’t earning enough to immediately pay their full tax debt.
Installment agreements can be a tremendous help when they are negotiated to fit you and your situation, but it’s important that these agreements are tailored to your needs. Simply delaying your payments as long as possible is not usually in your best interests. Penalties and interest may continue to accrue on the taxes you owe during the life of the payment plan. A plan that is shorter in duration will generally leave you with fewer penalties and less interest.
Your specific situation will determine what options are available to you; that’s why it’s important that you receive legal advice from experienced lawyers who understand these issues. Not everyone will qualify for an installation agreement, and if you do, your situation will dictate which type of agreement you can pursue. The plans available include:
Guaranteed Installment Agreement. If you owe the IRS less than $10,000, you may qualify for a Guaranteed Installation Agreement. Internal Revenue Code Section 6159(c) requires the IRS to accept a qualifying proposal for a guaranteed installment agreement for tax debts of no more than $10,000 that you cannot pay in a lump sum. This form of installment agreement affords you up to three years to pay. It also generally avoids a tax lien and does not require you to make substantial disclosures.
Streamlined Plan. If you owe less than $50,000, you may be able to pay your debt in installments through a streamlined plan, which must be paid off within six years. The IRS, though, has the discretion to accept or reject your offer of the plan. The IRS may also insist on imposing a tax lien on your assets, depending on how promptly you act, as well as other factors. Streamlined plans generally do not require substantial financial disclosures.
Non-Streamlined Plan. You may also be able to negotiate an installment plan with the IRS if you owe more than $50,000. In this situation, the IRS likely will require you to disclose detailed financial information on your assets, income, and expenses. The IRS is also more likely to impose tax liens on the assets you disclose, which could affect your ability to sell or mortgage properties or continue business lines of credit. With a non-streamlined plan, you may be able to extend your payments for up to ten years, and you may not have to pay the full amount, depending on what the IRS is willing to agree to accept.
If you would like to know if you might qualify to pay your back taxes through an installation agreement, contact The Law Office of Beverly Winstead, LLC today. Founding and managing attorney Beverly Winstead has won many IRS battles for her clients, and she focuses the firm’s experienced lawyers on helping people like you with precisely these kinds of tax resolutions. Call The Law Office of Beverly Winstead, LLC now at (301) 306-1234 or contact the firm online.