Spokane IRS Installment Agreement
An installment agreement is one of the IRS most-pushed methods for collecting back taxes. These plans don’t prevent the IRS from charging penalties and interest, but at the same time, they add some level of assurance that the filer is in the process of paying.
Otherwise, the balance sits due, and the IRS’ numbers look bad.
An IRS payment plan can benefit the payer, too, but they should be cautious about jumping into one too hastily. First, they should consider their eligibility for other forms of relief that could work better for their situation.
For example, they may be able to have some penalties waived, or they could reduce the size of their tax debt through an offer in compromise. There are also situations where the filer can reduce the amount they owe by disputing their assessment or by filing an amended return that includes additional deductions, credits, and corrections that they missed the first time around.
Instant Tax Solutions can help you examine all of your options for tax relief. In the event that an IRS installment agreement is the best option for you, we can help you set up a plan that makes sense for your financial situation while helping you pay the lowest amount possible.
When you are ready to discuss your options for finding tax relief, call (888) 886-5526 or contact us online to schedule your free, confidential consultation and financial review.
What Are My Options for Entering Into a Spokane IRS Payment Plan?
In order to qualify to enter into a payment plan, you can’t have tax debts higher than a certain amount. These amounts vary depending on whether you are an individual filer or a business.
Some people will be both, which means they have separate tax accounts for their own finances and their business’s tax debts.
To qualify for a long-term payment plan as an individual, you have to hold $50,000 or less in tax debt, including all currently assessed penalties and interest. You must also be current on all recent tax returns, up to the past three years, at least.
If you owe a higher amount of back taxes than that, you can still qualify for a short-term payment plan if you owe less than $100,000 total.
Businesses can only qualify for a long-term installment agreement if they owe $25,000 or less and have filed all recent tax returns.
Short-Term Payment Plan Option
A short-term payment plan is little more than a glorified extension of the amount due. You can elect to pay in full in either 90 days or 180 days.
This option works for some filers who just need a little “breathing room” to get their back taxes fully paid up.
While any taxes paid past the initial deadline are considered past due (even if you have a filing extension), paying in the shorter time window reduces the total amount of penalties and interest that will be added. You may also get more leniency from the IRS when they are deciding to release a levy or property lien.
Another benefit is that there is no application fee for a short-term payment plan.
Short-term payment plans are also less likely to be rejected on the basis that the applicant has the ability to pay earlier. The IRS is happy to be getting their money, simply put, and will often stand aside from all collection actions while you get ready to make the final payments.
Note that there is no guarantee that the IRS will release a lien or even agree to a short-term payment plan proposal. They consider each request on a case-by-case basis while looking at the filer’s history, current financials, their ability to pay, and other factors.
Long-Term Payment Plan Option
A long-term payment plan makes arrangements to pay off the tax amount due over the next 72 months or less. While the installment agreement is carried out, penalties and interest will continue to be added to the balance.
Because of this, the proposed payment amount should be enough to resolve the full tax debt with the added penalties and interest accounted for.
IRS installment agreement applicants will have to pay a setup fee, according to the following amounts:
- 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
In many cases, a long-term payment plan is the only practical way someone who owes back taxes can manage to pay off their debt. They should know that they are expected to remain current in all future tax filings and payments, as well, or their agreement could go into default. Their tax balance would come immediately due, once more, with all new charges added.
An Installment Agreement Can Remove a Bank Levy and Other Penalties
If you have been threatened with a lien or a levy or currently have one or both in place, then entering into an installment agreement could provide you relief from these collection actions.
By law, the IRS cannot maintain a levy or hold on any accounts or other property while an approved payment plan is in place. They are allowed to maintain a lien, but they may be willing to release it if they are convinced that the filer will hold to the terms of the payment plan.
Relief May Be Provided While an Installment Agreement Is Pending
Applications for installment agreements submitted online are approved or rejected immediately, though someone who was rejected through the Online Payment Agreement (OPA) tool can still apply for a payment plan by submitting Form 9465. Your approval will be pending for up to 30 days.
While approval is pending, the IRS legally cannot issue a new levy, and their time to collect is suspended. In other words, all collection actions are supposed to be put fully on pause.
If your installment agreement is made in connection with a proposed offer in compromise, then you are expected to submit your first payment and continue making timely payments while your application is being considered.
Can I Change My Payment Plan?
Yes, filers who have successfully entered into an installment agreement can elect to propose changes to their plan at any time. Using the IRS OPA tool, you can change the:
- Monthly payment amount
- Monthly payment due date
- Payment type to a Direct Debit agreement
- Change the payment source (routing and account number)
You can also apply to have your payment plan reinstated after you default.
How Can I Enter Into a Spokane IRS Settlement Agreement?
One key factor about installment agreements is that they are supposed to pay for the entire balance due in full, including all penalties and interest that accrue during the duration of the plan.
Filers may be eligible to reduce the amount of total taxes and penalties they will owe by submitting an Offer in Compromise in lieu of a payment plan. The IRS has the discretion to accept or reject this offer based on their consideration of your ability to pay and the reasonableness of the plan’s terms.
The applicant must also submit 20% of the final proposed amount if they intend to pay over the short term or begin making installment agreements for a long-term proposal. An IRS settlement agreement can dramatically reduce what you owe in some cases, but they are not appropriate for everyone.
The requestor must be current on all other taxes and filings in order to be considered. They must also pay a non-refundable $205 fee.
In addition to requesting an offer in compromise, a filer can also request penalty abatement. If granted, the IRS will remove a certain amount of penalties, plus interest, lowering the amount you owe.
Requesting Consideration for Currently Not Collectible
Some filers are unable to make any sort of payments or proposals in their current financial state. They can submit for approval of “currently not collectible” status, which puts a pause on collection actions and can extend any deadlines proposed.
While the collection is suspended, the filer can use the opportunity to free up some of their finances and consider their options for entering into an installment agreement or proposing an offer in compromise.
Get Help With IRS Tax Penalty Relief and Payment Plan Proposals
Options for tax relief are out there, but they depend on your ability to show what you can pay and to suggest an arrangement that the IRS finds agreeable.
Sometimes, they will reject payment plan proposals because they feel you could offer more faster. Other times, they will be working from incomplete information, coming to a conclusion that would have been different if they had everything they needed to make a valid decision.
Instant Tax Solutions can help you go through your current finances, top to bottom, and document exactly what you owe and what you can pay. We can help you submit any vital information to the IRS, including amended returns or disputes of your current tax assessment.
We can then go through each and every option available, including payment plans, to help you reach the ideal outcome for your own financial future.
Take steps towards getting out from underneath the pressure of tax debt when you call (888) 886-5526 or contact us online to schedule a free case and accounts review today.