One of the most common methods of back tax payment, and one that the IRS strongly prefers over many other methods, is a simple IRS installment agreement or payment plan. Such plans allow you to come up with a manageable schedule of payments that chip away at your debt little by little.
While they do not provide serious relief from your back taxes owed, they do allow you to feel more confident about your ability to pay down what the agency says you owe.
They do not, however, prevent the IRS from charging penalties, fees, and associated interest. This means that you may, in the end, pay more than you actually initially owed.
Still, you may be able to negotiate the removal of some of these fees and penalties in your installment agreement. You may also have other options to reduce your tax burden, but only if you seek the right help before you dive into negotiations with the agency.
At Instant Tax Solutions, we have an extensive staff comprised of experienced Portland tax lawyers, expert CPAs, and other tax relief professionals. Together, we have decades of combined experience and knowledge in just how the IRS thinks and works.
We can help you choose an installment plan or other form of tax relief that suits you, and we can negotiate on your behalf to help you achieve tax relief that will get you the financial freedom you need.
If you’re ready to find tax relief and the peace of mind that goes with it, get in touch with us today. Just call (888) 363-8958 or contact us online for a confidential, no-obligation, free financial review.
Overview of Portland IRS Settlement Agreements
Installment agreements are simply payment plans that you enter into with the IRS. This gives you an extended timeframe to pay off your debt. These types of settlement agreements come in two forms: long-term installment agreements and short-term payment plans.
After you get your payment plan approved, you must pay setup fees to cover the cost of getting the payment plan established and in place. These setup fees vary depending on the specific plan you choose.
Short-term payment plans allow you to pay off your tax debt in 180 days or less. This form of payment is only available for individual taxpayers, not businesses.
You can pay directly from your bank account or enroll in the EFTPS or Electronic Federal Tax Payment System. You can also use a check, money order, debit card, or credit card to pay.
A few benefits of short-term plans include:
- They carry no application fee
- They generate fewer penalties and less interest
- The IRS tends to look more favorably on them when it comes to removing liens and levies
- They are more likely to be approved
Long-term payment plans come in two varieties. The first allows you to pay through Direct Debit, while the second lets you use DirectPay to make monthly payments from your bank account, pay using the EFTPS, or pay by sending a check or money order or using a credit or debit card to pay.
Long-term payment plans give you up to 72 months to pay your tax debt down. They may carry setup fees ranging from $0 for low-income qualifiers to $225, depending on the type of payment plan you seek and how you apply.
They are more difficult to get approved, and they do tend to generate a lot more fees, penalties, and interest. In the end, they cost you more money but may result in lower individual monthly payments that are easier to manage.
Negotiating a Portland IRS Installment Agreement
To negotiate your Portland IRS payment plan, your tax debts must fit into a specific range. If they are too high, the IRS will not accept your application.
The maximum debt you can hold depends on whether you are an individual taxpayer or a business, with individuals having a higher threshold than businesses.
Individual taxpayers with $50,000 or less in back tax debt, including any fees, interest, and penalties, can apply for a long-term payment plan provided that they are up to date on all tax return filings over the past three years. Those who have a higher tax burden, up to $100,000, may still qualify for a short-term payment plan.
The IRS is much more stringent when it comes to businesses. A business owner may only have $25,000 or less in back taxes to qualify for an Installment Plan.
Like individuals, the business must also be current with filing their past three years of tax returns.
Keeping up With Your IRS Payment Plan
If you are an individual, you have a balance of more than $25,000, and set up your payment plan online, you are required to use Direct Debit to pay your installments. If you are a business owner with a debt of more than $10,000 and set up your payment plan online, you must use Direct Debit.
Direct Debit means that the IRS will automatically take the money out of your bank account on each scheduled payment date. It means that you will not have to worry about remembering to make payments, but you also must ensure that you have the money there to make the payment.
If you have the option and you choose to pay by DirectPay, credit or debit card, check, or money order, you will be responsible for making your own payments every month.
It is vital that you do not miss a payment. Defaulting on a payment plan can lead to much harsher collections efforts by the IRS, such as levying your bank accounts or even seizing assets like your house or car to get their money back.
If you run into problems with your installment agreement, you may be able to make changes. The IRS has an online payment agreement (OPA) tool that lets you change your bank account adjust your payment date, or otherwise modify your payment plan.
The idea is to make it as easy as possible for you to stick to your arrangement.
Other Options for IRS Tax Relief
Installment agreements are just one form of IRS tax relief. In fact, some other forms of tax relief may go hand-in-hand with your payment plan or may even be a better option for you. Other types of tax abatement you may seek include:
- Removing fees and penalties
- Lifting levies and liens
- Currently not collectible
- Offer in compromise
- Filing amended tax returns
Removing Fees and Penalties
Removing fees and penalties can sometimes be negotiated as part of your payment plan. This can reduce the amount of total taxes you owe and, consequently, your monthly payments. For every penalty or fee you are able to remove, the associated interest with that fee or penalty also goes away.
Instant Tax Solutions can help you negotiate the removal of these additional fines, fees, penalties, and interest whenever possible.
Lifting Levies and Liens
When you enter into an installment plan, it may remove levies and liens imposed by the IRS. This is because the law states the IRS may not maintain their holds on accounts and property while a payment plan is approved and in place.
Liens may remain in place, but if they can be convinced you will stick to your plan, they may release liens. Instant Tax Solutions can help make this happen by representing your interests.
Currently Not Collectible
“Currently not collectible” status means that you convince the IRS you simply do not have the means to pay on your taxes. This form of relief does not actually abate, reduce, or remove your tax burden.
You will still owe. It just gives you some breathing room so you can work out a plan to get back on your financial feet again.
At ITS, we can help you review your finances and gather the records that prove you are unable to pay your debts at this time.
Offer in Compromise
An offer in compromise means that you make an offer regarding what you are able to pay. The IRS then accepts this offer and considers your account closed.
This is one of the most common approaches to paying off taxes, but it can be tricky to get the IRS to accept a reduced amount as pay in full. At Instant Tax Solutions, we can help review your finances, gather evidence, and build a case for a reasonable offer in compromise.
Filing Amended Tax Returns
For some people, filing an amended tax return can be the best of all solutions. It may allow you to take additional deductions and credits, fix errors on prior tax returns up to three years old, and significantly reduce what you owe.
Though not common, sometimes it can even eliminate tax burden or create a refund. If this is possible, Instant Tax Solutions can help you work out which credits or deductions to which you are entitled or fix errors on prior tax returns.
Get Help With Your IRS Settlement Agreement
Instant Tax Solutions has almost 20 years of experience helping people just like you to find relief from tax burdens that weigh heavily on them. We have only one purpose, and that is to help you get back on your financial feet and find the peace of mind you deserve.
We will help you to go through your financial and tax records and then explore your options for reducing your tax burden. We will help you to restore a positive financial future.
When you are ready to get out from under your tax debt, call (888) 363-8958 or fill out our online contact form to schedule a free review of your accounts today.
