Sometimes we find ourselves on the wrong side of the Internal Revenue Service. Tax laws are always changing and are updated from time to time. Insufficient knowledge of the current laws may come at a disadvantage to you; therefore, you need True Tax Resolve. At True Tax Resolve, we will help you manage your tax issues. Unlike attorneys and CPA accountants, we specialize in taxes. We provide you with the necessary guidance or representation so that you may live an easier life.
Owing the IRS money is not a crime
Tax debt accumulation can happen to anyone, even the most honest of taxpayers, you make a mistake or miss to declare something (without malice or ill intention), you find yourself in debt to the Internal Revenue Service. Over thousands of dollars; that you do not have, must be paid. Many Americans are terrified to open their mail with the fear that the IRS may drag them to jail. Here is an assurance for you; being unable to pay your taxes is not a crime, it may make you broke, but it doesn’t make you a criminal.
Here at True Resolve Tax, it’s our duty to listen to you, discuss your options and advise you on the best way forward. We guide and help our clients negotiate IRS tax installment agreements. In this article, we shall break down the installment agreements for you so that you may understand how it works, and the options involved.
IRS Installment Agreements
Among the many tax resolution services, we offer at True Resolve Tax, IRS Installment Agreement negotiation is one of the most common. What is a tax installment agreement? An IRS tax installment agreement is a payment plan or agreement between you and the Internal Revenue Service. If you are unable to pay your debt to the revenue authority in its entirety, there are cases where the IRS will let you break down the debt into installments paid over time. You are obligated to pay your tax debt within a specified period, usually five to six years- sometimes even up to ten years. The period is determined by the severity of your case and your ability to pay the tax debt.
There are four types of installment agreements:
- Streamline agreement
- Partial pay agreement
- Tiered agreement
- Full pay agreement
Allow me to break each one down for you.
Taxpayers who owe the IRS less than $50,000 in tax debt qualify for the Streamline Installment Agreement. The Streamline Installment Agreement is a payment plan that allows you to pay your tax debt (less than $50,000) over a 72-month (six years) period. It is important to note that penalties and interests will continue to accrue during the period of payment.
If you owe less than $25,000, the process is quite simple and easy. You can apply online or call the IRS and request for an automatic streamline installment agreement. If you owe more than $25,000 but less than $50,000, IRS agents will ask you a set of simple questions. The goal is to make sure that you do not have any assets that can be liquidated to help you pay your debt sooner. As part of the agreement, you assure the IRS that your future taxes will be filed in time. The payment period remains 72 months, to calculate the value of each installment, use the formula below;
|The Value of Each Installment = Total Tax Debt ÷ 72|
Six years is a long period to have the IRS in your life. You may be tempted to increase the value of your monthly installments to clear your debt sooner. This is where we come in. Our licensed tax agents, working for True Resolve Tax, will help you calculate the maximum amount of money that you can comfortably pay the IRS each month. As a standard procedure, we take into consideration some of the periodic expenses that do not occur each month, like unexpected or emergency expenses (motor vehicle repair), quarterly or semi-annual expenses.
Negotiating directly with the IRS personally can be tough and intimidating. Agents from the tax authority may pressure you to pay a down payment or to commit to an installment plan that you cannot maintain. With our guidance, you will be better equipped for such situations. Self-representation is not bad. However, if there are complexities in your case, you have the right to and it might be beneficial to be represented.
Partial Pay Agreement
If a taxpayer files a tax return with a balance due, the IRS has a ten-year period to collect that tax. This period is referred to as the collection statute limitation. To qualify for the partial payment agreement, you need to have a tax liability that your monthly ability to pay will not pay in full over the number of months left on the collection statue to pay. In the partial payment agreement, you will end up only paying a part of your total tax debt. At True Resolve Tax, we have guided many clients through the partial payment agreement process. This type of IRS installment agreement is one of the best options available. Visit us at our Denver, CO offices and let us discuss your options.
This type of IRS installment agreement is tailored to the needs of taxpayers who are attending to other non-tax debts. The tiered agreement is a payment plan that allows you to start paying off your tax debt with smaller monthly installments as you attend to your non-tax debts. Once you clear your debts (non-tax) the IRS will increase your monthly installment obligation. This IRS installment agreement differs from the streamline installment agreement in that the monthly installments are not equal throughout the duration of payment. We can negotiate for you a tiered agreement that will not leave you in financial limbo.
Full pay agreement
This is an IRS installment agreement that allows the taxpayer to pay their tax debt within a period determined by the law (usually 10 years). To qualify for the full pay agreement, you need to prove to the IRS that you are incapable of paying (by the liquidation of assets or borrowing money) your tax debt within 72 months. This IRS installment agreement requires a full financial disclosure. The applicant has the burden of proof. This means that you need to prove the existence of financial difficulty in your life. As our client, we will walk you through the process and help you file the necessary documentation.
Accumulating a tax debt is not a crime. This can happen to anyone and there is no need for fear. The IRS often uses this fear to intimidate taxpayers into committing to payment plans which they cannot live up to. At True Resolve Tax, we provide best services in tax resolution. Rated among the top three in Denver, we are the firm of choice. Do not wait until it is too late, visit our offices or call us so that we may discuss your options. Life should be easy; allow us to negotiate an IRS installment agreement for you.