Anyone seeking IRS tax relief has multiple options when it comes to repayment, but an installment agreement is by far one of the most utilized methods. It can be a beneficial option for many filers, although it shouldn’t be the only course of action that a filer considers.
In some cases, someone interested in an agreement may be eligible to have penalties and other fees waived, reduced, or reevaluated. It is essential that one reviews the extent of their options before committing to any plan, even though an installment agreement can undoubtedly make the repayment experience easier for certain debt holders.
A payment plan won’t stop interest from accruing or additional penalties from being collected, but it can act as a ‘good faith’ measure, establishing that you have an intention to repay while potentially providing relief from government liens and levies.
Our tax professionals at Instant Tax Solutions can help you better understand if an installment plan is right for your unique situation, and we will be available to consult with you on all your best options available.
Ready to take control of relieving tax debt? To schedule a free consultation with a local tax expert, call (888) 485-8109 or contact us online.
Consultations are confidential and leave the client with no obligation to use our services after.
A How To: Entering Into a Boise IRS Payment Plan
Not all individuals with tax debts will qualify for an IRS payment plan, but those who do may have more than one option. Filers with more than a certain amount of debt might need to look for an alternative route for debt repayment; the amount depends on whether the tax is related to personal or business income.
As a filing individual, you can apply for a long-term repayment plan with up to $50,000 in back taxes, including all penalties and interest. Moreover, the individual must also be up to date on their tax returns for at least the last three years.
Filing individuals may still qualify for a short-term payment plan with up to $100,000 in overdue taxes.
Businesses have different qualifications and can only apply for an installment plan with under $25,000 and up-to-date tax returns.
Short-Term Payment Plan
A short-term payment plan offers a limited window of extra time to repay your amount in full.
When applying, you can choose between a 90 or 180-day extension to your bill. This can be a convenient choice for those who have the funds to pay their back taxes but may need a few extra days to get their finances in order.
Even though the tax payment is still considered past-due, a short-term payment plan helps the filer stay on track to avoid incurring excessive penalties and interest fees. It can also help them prevent the IRS from taking certain collection actions, such as placing levies on wages or accounts receivable.
Setting up a short-term extension to pay unpaid taxes may also act as an incentive for the IRS to release an existing levy or property lien. It is important to note that not all applicants will be approved for a short-term payment plan, and there is notably no guarantee that the IRS will lift a lien with the acceptance of a repayment plan.
Short-term payment plans are free to apply for, and they are less likely to be rejected because the applicant is demonstrating a willingness to repay their past-due balance in a timely manner. The IRS wants to get paid, which means they want to make the situation as smooth as possible.
By simply setting up this payment plan, you can avoid collections actions and other negative proceedings from unfolding.
Long-Term Payment Plan
Another option for repaying tax debt is to apply for an IRS installment agreement. These long-term payment plans map out a way for the filer to repay their tax assessment in 72 months or less.
An installment agreement is a convenient way to automate paying your tax debt, but it will not stop interest or other penalties from accruing. It is critical that applicants keep this in mind while proposing their payment amount, as it must account for all the incurring interest and other fees.
A long-term payment plan is a practical solution for many filers, as it doesn’t require the individual to fork out a large sum of money at once. Instead, it paves the road for a clean slate with the IRS.
Once an installment agreement has been approved, the individual is responsible for on-time installment payments and ensuring that all future tax proceedings stay up-to-date. Failure to do so may result in the agreement defaulting, leaving the individual with an immediately due tax balance.
There is a fee for IRS installment agreement applicants that depends on the listed circumstances:
- Direct Debit, apply online: $31
- Direct Debit, apply by phone, mail, or in-person: $107
- Direct Debit, low-income qualifier applying online, by phone, or in-person: $0
- Other payment plans apply online: $130
- Other payment plans apply by phone, mail, or in person: $225
- Other payment plans, low-income qualifier, applying online, by phone, or in-person: $43
Relief Begins While Installment Agreement Approval is Pending
You can apply for an installment agreement over the phone, by mail, online, or in person. Applications submitted online are approved or rejected immediately.
Those rejected for an online repayment agreement have another option to apply for a payment plan by submitting Form 9465. After submitting said form, approval may take up to 30 days.
During this time, all collections are paused, and the IRS cannot legally issue a new levy. While collection proceedings from the IRS are paused, an individual must pay on other agreements, such as an offer in compromise made in connection with an older tax debt.
How Do I Enter Into a Boise IRS Settlement Agreement?
The main objective of a repayment agreement is to have the entire balance due paid off by the end of the arrangement, including all interest and other penalties. There is no repayment plan that stops new interest and fees from accruing.
It is possible to reduce your settlement amount by applying for an Offer in Compromise. This way, the IRS still gets most of their money, and you get a clean slate.
They can accept or reject your proposed Offer in Compromise based on their considerations about your ability to repay the amount or more.
Aside from an Offer in compromise, an individual may also request penalty abatement in some circumstances. If granted, the IRS could remove a hefty amount of interest and other penalties from your outstanding bill.
If the filer has been approved for a short-term Offer in Compromise repayment plan, a minimum 20% down payment must be submitted before any agreement is set in motion. A settlement agreement plan is not for every debtor but can be a useful way to reduce the actual amount owed on taxes.
In order to be considered for a settlement agreement, the filer must be up-to-date on all other tax proceedings and pay the $205 fee.
Applying for “Currently Not Collectable” Status
In some instances, a filer may not have the ability to repay any of their outstanding balance immediately. The IRS accounts for that very real possibility by allowing for the individual’s account to be temporarily considered as “currently not collectible.”
This action will pause collections and extend any looming deadlines.
“Not collectible” status is a prime opportunity for the filer to organize their finances and assess the advantages and concerns of entering into a repayment agreement or preparing an Offer in Compromise.
The statute of limitations for “currently not collectible” status is generally 10 years, but unusual circumstances call for unique measures. Note that the timeframe of “currently not collectible” status will differ for each individual, and the IRS may not even grant such leniency in some cases.
Is It Possible to Change the Terms of Your Payment Plan?
Simply put, yes! Those who have entered into an installment agreement have the option to propose a change to said agreement at any time.
The IRS can either accept or reject changes to existing payment plans and while they decide, your current plan will remain intact.
The IRS OPA tool can help you change the following:
- Monthly payment amount
- Monthly payment due date
- Payment type to a Direct Debit agreement
- Change the payment source (routing and account number)
Looking for IRS Tax Penalty Relief? Help Is Out There With Instant Tax Solutions
There are a variety of relief options out there for someone struggling with tax debt, but it is essential that you and the IRS agree on what the best plan is by assessing your income and outstanding balance.
It’s possible for a payment plan proposal to be rejected if the IRS deems that you can pay more, and this can stem from incomplete or unevaluated documentation that has yet to be evaluated. You may also end up proposing a payment amount and schedule that hurts your ability to get your finances in order overall. Our tax attorneys in Boise will help you analyze your current financial situation and determine the optimal plan and forms of relief for you.
The team at Instant Tax Solutions can help you take control of your tax debt and find relief. We’ll provide assistance with disputes and returns and can even answer pressing questions about the installment plan process.
Get ahead in your efforts to find the ultimate solution to your tax debt, and call (888) 485-8109 or contact us online.
