Looking into making payment arrangements with the IRS in Los Angeles? Should you call a federal tax attorney in Los Angeles for your IRS tax problems? Navigating this long tax season can be an ordeal for many, and discovering you owe a sizable amount to the IRS only intensifies the stress. What happens when you can’t settle that amount immediately? Fortunately, the IRS provides options for taxpayers to handle their tax obligations in manageable ways. Enter IRS payment arrangements.
These arrangements, however, come with intricacies that can be daunting for the average taxpayer. That’s where the knowledge and experience of a tax attorney in Los Angeles shines brightest. In this guide, we’ll explore the options available for payment arrangements with the IRS anywhere you live and explain why getting a tax attorney can be a game-changer.
Understanding IRS Payment Arrangements
At its core, a payment arrangement with the IRS is an agreement you strike with the IRS to pay your tax obligations when you can’t pay the full amount due. The IRS offers the following IRS payment arrangements:
◊IRS Installment Agreements (IA): Essentially a monthly IRS payment plan, the installment agreement allows taxpayers to pay off their debt in smaller, more manageable chunks. Types of installment agreements include:
- Guaranteed Installment Agreements: An IRS Guaranteed Installment Agreement is a type of payment plan that allows individual taxpayers to pay off their tax debt in smaller, more manageable amounts over time. Here are some key points about this agreement:
- Eligibility: It’s available to taxpayers who owe $10,000 or less in tax (not including penalties and interest).
- Payment Term: The taxpayer must be able to pay off the owed amount within 3 years.
Tax Filing and Payment: To qualify, taxpayers must have filed all required tax returns and not entered into a new installment agreement within the last five years.
Automatic Acceptance: The IRS is required to accept this agreement if a taxpayer meets all the eligibility criteria.
Future Refunds: If you have a refund due in a future year while your installment agreement is still in place, the IRS will apply the refund to the amount you owe.
Stay Current: While under the agreement, the taxpayer must continue to file all required tax returns and make all payments.
- Streamlined Installment Agreements: The IRS Streamlined Installment Agreement is a type of payment plan designed for taxpayers who want to settle their tax debts in a more straightforward manner. Here’s a description:
- Eligibility: Specifically designed for taxpayers who owe $50,000 or less in combined tax, penalties, and interest.
- Simplified Process: Unlike other types of installment agreements, the streamlined agreement doesn’t require taxpayers to provide a detailed financial statement or other extensive financial details to the IRS. This makes the application process quicker and less burdensome.
- Duration: The total tax debt must be payable within 72 months (6 years).
- Direct Debit Option: Taxpayers can opt for automatic payments, where monthly installments are directly withdrawn from their bank accounts, or choose a payroll deduction method.
- Compliance: To be eligible, taxpayers must be current with all filing requirements and cannot have entered into another installment agreement within the last five years.
- Partial Payment Installment Agreements(PPIA): This is an agreement if you owe and cannot pay the full amount owed. The PPIA allows you to make monthly payments on your tax debt, but unlike a guaranteed or streamlined installment agreement, the monthly payments do not fully pay off the IRS tax debt by the end of the agreement term. Instead, you pay as much as you can afford over the term of the agreement, and at the end of that term, any remaining tax debt may be forgiven.
- ◊Offer in Compromise (OIC): This lets you settle your tax debt for less than the full amount you owe, contingent upon the IRS believing they can’t collect the full amount. Taxpayers need to submit Form 656, “Offer in Compromise,” and in some cases, Form 433-A (OIC), “Collection Information Statement for Wage Earners and Self-Employed Individuals,” or Form 433-B (OIC), “Collection Information Statement for Businesses.”amount. Not everyone is eligible for an OIC. The IRS will consider an OIC based on three grounds:
- Doubt as to Liability: Uncertainty exists about the correctness of the tax amount owed.
- Doubt as to Collectibility: The taxpayer’s assets and income make it unlikely that the IRS could collect the full amount.
- Effective Tax Administration: Collection of the full amount would create an economic hardship or would be unfair and inequitable for other reasons.
- ◊Currently Not-Collectible Status: If you can’t pay, the IRS might temporarily delay collection efforts. It’s a respite, but penalties and interest continue accruing.
Navigating Payment Arrangements with the IRS in Los Angeles With a Tax Attorney
Deep Dive into Complexities: The IRS tax code and IRS documentation are notoriously intricate. A tax attorney helps demystify these elements, enabling you to understand all facets of your chosen payment method.
Skilled Negotiation: Especially crucial for methods like the IRS Offer in Compromise, tax attorneys possess the negotiation skills to potentially reduce the amount you owe.
Legal Know-How: Tax attorneys have dedicated their careers to understanding tax law’s nuances. Their experience is invaluable when deciphering the IRS’s specific requirements and ever changing laws.
Safeguarding Rights: You have rights as a taxpayer. Tax attorneys ensure these rights are never compromised during your interactions with the IRS.
Errors & Pitfalls: The consequences of errors in IRS documentation can range from delays to increased financial obligations. A tax attorney’s meticulous approach ensures accuracy and compliance.
How Tax Attorneys Enhance Specific Payment Arrangements With the IRS
For Installment Agreements: They can assist in determining which installment agreement is ideal based on your financial situation, ensuring you don’t overcommit and strain your resources further.
For Offer in Compromise: Tax attorneys understand the specific criteria the IRS seeks when considering an OIC. They can craft your application to emphasize these elements, increasing the chances of acceptance.
For Not Collectible Status: Ensuring that this delay benefits rather than hampers your financial situation in the long run requires a nuanced understanding of tax implications—exactly what a tax attorney brings to the table.
Real Cases Where Tax Attorneys Made the Difference
Case 1: Maria’s Installment Agreement: Maria owed the IRS $30,000. While she could manage monthly payments, the IRS’s initial figures were steep. Her IRS tax attorney negotiated a comfortable amount, ensuring Maria could meet other financial obligations.
Case 2: Liam’s OIC Success: Liam’s application for an offer in compromise was initially rejected. However, with a federal tax attorney’s assistance, he presented a compelling financial revision, resulting in the IRS accepting a revised, lower settlement.
Facing the IRS, particularly with significant tax obligations, can be an intimidating experience. However, the IRS provides payment arrangements to help taxpayers manage their debts. Understanding and making the most of these arrangements requires much experience, given the potential pitfalls and the intricacies of the tax code.
By leveraging the skills and knowledge of a federal IRS tax attorney in Los Angeles, you not only safeguard your rights but also ensure that your financial obligations to the IRS are met in the most efficient and least burdensome manner. The peace of mind that comes with knowledgeable tax attorney guidance? That’s simply priceless. Be sure to contact a skilled federal IRS tax attorney in Los Angeles at Delia Law. We can assist you with your IRS tax problems anywhere you live and nationwide.