If you cannot afford to pay your back taxes with the IRS, it is likely you will qualify for an IRS payment plan. This affords taxpayers IRS tax relief with the ability to pay off their tax debt over a certain length of time with the benefit of avoiding wage garnishments, IRS tax liens, bank levies and other IRS enforcement action. It is important to note that tax penalties and interest will still accrue, so it is most advantageous to pay the full tax debt amount if possible.
There are various types of IRS payment plans offered, with your monthly minimum depending on how much you owe. Determining the minimum amount can get tricky which is why it is helpful to consult with a tax attorney experienced in IRS problems and payment plans. The IRS will make a general inquiry as to how much you can pay and will almost always push you into paying more than you can afford by selecting the wrong payment plan for you. Make sure you and your tax attorney analyze each plan and choose one that is unique to your financial situation.
IRS Tax debt of $10,000 or Less
If you have a tax debt of less than $10,000, the IRS will generally approve your installment agreement automatically. This is also known as a “guaranteed” installment agreement. There is no minimum payment if you pledge the debt will be paid off within three years.
Tax Debt Between $10,000 and $25,000
If your IRX tax debt is between these amounts, you can qualify for a streamlined agreement. There is no guarantee, but approval is likely with usually no additional financial information required for approval. If approved, you will have 72 months to pay and there is a minimum payment equal to the tax debt due divided by the 72-month maximum period.
Tax Debt between $25,000 and $50,000
When you have higher tax debt problems, the IRS requires additional information (i.e., income and expenses). This additional information is submitted on Form 9465-FS. Your minimum payment will be your balance due divided by 72.
Tax Debt over $50,000
If you owe more than $50,000 in IRS tax debt, there will be a more thorough investigation of your financial situation. The IRS will require this financial detail of your assets, income and expenses, bank accounts and investments. In this case, your minimum payment will depend on what you negotiate with the IRS. It is especially helpful to have a tax attorney to aid you in the negotiations.
A reputable tax lawyer can assist you in resolving your IRS tax problems and will provide IRS tax help in choosing the best installment agreement for you. The San Diego Tax Attorneys at Delia Law have many years of IRS tax resolution experience and will aggressively represent you before the IRS. Please call for a no-cost tax attorney consultation at (619) 639-3336. We look forward to helping you.
This blog post is not intended as legal advice and should be considered general information only.