It doesn’t take much to find yourself in debt to the Internal Revenue Service. Miss a deadline on your income tax returns, fail to state or declare some information, or being under circumstances beyond your control; you are now in debt, and penalties are imposed against your IRS account. Unpaid taxes and penalties attract interest. Cumulatively, they cause substantial tax debts. Millions of Americans find themselves in debt to the IRS. Thousands of dollars and sometimes tens of thousands of dollars is expected of you. Not all taxpayers can pay these amounts comfortably. Therefore, you need a tax resolution service.
Being in debt with the Internal Revenue Service’s can be a problematic affair if you do not understand how the IRS functions. Tax evasion or cheating on your income is punishable under the law as federal crimes. Owing the IRS is not a crime. You cannot get arrested for having a tax debt. The first step towards a tax resolution is peace of mind. The Internal Revenue Service is only interested in recovering the money you owe. The IRS offers payment plans to help you pay your tax debt in the form of monthly installments. These payment plans are known as the IRS installment agreements.
What is an installment agreement?
An IRS installment agreement is a payment plan provided by the IRS to help you repay your tax debts. There are four types of installment agreements that you can make with the IRS.
The four types include;
- Streamline Agreement
- Partial Pay Agreement
- Tiered Agreement
- Full Pay Agreement
All payment plans are unique and guarded by a set of terms.
The Streamline Installment Agreement
The Streamline Agreement is part of the fresh start initiative by the IRS. Taxpayers with tax debts below $50,000 qualify for the IRS streamline agreement. The Streamline agreement is set to pay-off your tax liability (Below $50,000) in seventy-two months. The value of each monthly installment is determined by dividing your tax liability into 72 equal parts. A $36,000 tax debt is paid off by 72 installments worth $500 each, over six years.
There are two levels available for the application of this IRS installment agreement. If you owe less than $25,000; you can apply for the Streamline Agreement through the Internal Revenue Service’s online service. The process is simple and user-friendly. If you owe between $25,001 to $50,000; you have to undergo a session involving questions regarding your assets.
72 months or six years is a pretty long time to be in the IRS’s crosshairs. There will be times when you will feel like stepping up your monthly obligations to the IRS to finish your debt faster. This, however, is not a smart move because there may come a time when you will be unable to live up to your commitment. When you seek the services of True Resolve Tax, our tax agents will assess your finances including monthly expenses like rent, annual expenses, bi-annual expenses and unexpected spendings like vehicle maintenance and repair.
The aim is to advise you on the amount of money that you can pay the IRS with the least financial consequences. You may choose to walk this road alone, but without the knowledge of how the IRS operates, it will be quite tricky. IRS agents may pressure you to commit to a higher monthly installment or pay a hefty down payment. Without the knowledge of your rights as a taxpayer, intimidation is a tactic some agents at the IRS will pull out and use against you.
Partial Pay Agreement
The partial pay agreement is an IRS installment agreement that ends up partially paying your total tax liability. According to the law, the IRS has a maximum period of 10 years to collect a particular debt. If you file a tax return and you have a liability that you owe the IRS, the Internal Revenue Service has ten years to recover that liability. Some circumstances can stall this period while other conditions prolong it. If you walk into our Denver offices while you owe $70,000; with three years left to pay, there is a high chance that you will not be able to clear your debt in time. There was a time when the IRS used to pressure taxpayers to extend the collection statute of limitations. Thankfully, they do not do that as often anymore.
The IRS will assess your collection information statement. Your 433F, 433A as an individual, or your 433B if you are a small business owner that has been assessed. They use this information to determine how much you can afford to pay. If by the IRS standards, you can only afford to pay $400, you will end up paying $14,400 ($400 per month for three years) on a $70,000 debt. Sounds, far-fetched? Those are the rules. At True Resolve Tax, we have guided multiple clients to a total tax resolution using this IRS installment agreement. You need professional help to guide you through this process.
The Tiered Agreement
This is an IRS installment agreement where the monthly installments are not equal. The value of each installment may fluctuate depending on your financial situation. If you owe the IRS yet you have other financial obligations, you can enter into a tiered agreement with the IRS. How does this work? Let’s say that you are in the process of repaying a bank loan, or servicing a mortgage, your ability to pay is somehow inhibited or restricted by your commitment to the bank. You shall start your monthly installments with an amount that the IRS will determine. Once you complete your obligations to your bank, the IRS will increase your monthly payments. You need professional help when it comes to the IRS tiered agreement. Without knowledge of the IRS guidelines they must follow, you may end up getting a deal that does not fit your financial capabilities.
Full Pay Agreement
The IRS has a ten-year window to collect a particular debt. The Full Pay Agreement is an IRS installment agreement that guides taxpayers to pay their liability in full within whatever time remains of the ten-year collection statute. The Full Pay Agreement is open to those who prove to the IRS that with the liquidation of assets and borrowing, they are unable to raise the tax liability stamped against you within 72 months. The IRS expects full financial disclosure before they can green-light you for the Full Pay Agreement. The burden of proof rests on the taxpayer. As a tax resolution firm, it is our moral responsibility to give you sufficient guidance and help you through the process.
Whichever situation you may find yourself in, there is a tax resolution solution for you at True Resolve Tax. Our agents are enrolled to represent our clients with the IRS; we wield the knowledge on how to navigate the minefield that is tax resolution. We offer client representation and consultation. We assess your finances to determine your ability to pay before we charter your next move. Call us for a tax consultation or visit our Denver offices for a chat. We aim to guide you to a tax resolution that will pay the least amount of money allowed by the law. Invest in peace of mind, let us work your taxes.
True Resolve Tax, Championing for Absolute Tax Resolution!