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If you are someone who doesn’t readily have the financial assets available to pay the tax debt but has the possibility of future income, then it would be a good idea for you to try the IRS installment agreement.
The most common method for individuals and businesses to pay their back taxes that are owed to the government is an installment agreement (IA). When the tax that needs to be paid is less than $25,000, then it’s typically easy to get an IRS installment agreement. Any value above $25,000 can be a bit troublesome.
It should be remembered that you need to save some money after all your living expenses to pay for an IRS installment agreement, otherwise, it will amount to being a wasted effort. There were quite a few chances of getting a tax lien in the previous years since the IRS decided not to file a tax lien if the taxpayer sets up a Direct Debit Installment Agreement. Installment agreements involve the taxpayer paying directly from his bank account so that monthly payments can be collected automatically.
Unlike an OIC, there are various types of IRS Installment Agreements. We have listed the most common kinds of IRS Installment Agreements for your convenience below.
For taxpayers who need to pay $10,000 or less in tax, this is most simple and common IRS Installment Agreement.
This was originally aimed towards taxpayers with less tax than $25,000, but recent changes have made this applicable to anyone with less tax than $50,000. It is called “Streamlined” because it will not require you to disclose your complete financial status.
If you have over $25,000 in taxes or in case you can’t meet the monthly installments, then opting for Financially Verified Installment Agreement would be more advantageous over a Streamlined Installment Agreement. It goes by many names, but to successfully apply for a Financially Verified Installment Agreement you will be required to fill out the Form 443 in which you will have to disclose and verify you complete financial assets. Hiring a tax consultant is recommended and is a wise choice.
If you owe more than $100,000 in taxes, then prepare yourself for a long-term installment agreement. In most cases the IRS will have you sell off some of your existing assets to have some of your tax reduced before opting for an installment agreement. In such a case, it is highly recommended that you seek professional help.
If there are absolutely no applicable means for you to pay your taxes, then a Partial Payment Installment Agreement is best suited for you. This will require you to have much less than the original debt in overall due to the limitations placed by the Statue of Limitations or CSED. This is hardly ever accepted and demands full financial disclosure. Hiring an experienced professional is highly advised.
In the case of unpaid payroll taxes, an In-Business Trust Fund Installment Agreements is the most commonly used agreement. After the relatively new program that launched in 2012, businesses that owe less than $25,000 will be allowed to set up a payment plan for which they do not have to verify or disclose their full financial status, along with there being no need for a lien to be filed as long as the underlying party agrees to pay their tax debt through their bank account on a monthly basis.
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