Are you worried about the owed tax amount and unable to pay all at once to the IRS? Do you want to pay your tax debt to the IRS in an Installment plan? Owing money to the IRS means paying not only the tax but also interest and penalties, which can be overwhelming.
However, the IRS offers installment payment plans to help you manage your debt over time. While the interest rates may be high, these plans can ease your financial burden and stop aggressive collection actions.
This article discusses the IRS payment plans, eligibility criteria, and types of IRS Installment plans. The experts at VTax Services provide you with the best tax resolution services and help you get a suitable IRS installment plan for tax relief.
What is an IRS payment plan?
An installment agreement is an IRS payment plan that allows you to pay your tax bill over time in installments. If you owe taxes for more than one year, this agreement will combine all your tax debts. However, you cannot simultaneously have more than one installment agreement with the IRS.
While your request is being processed, the IRS usually stops collections. During the installment agreement review, the IRS may delay collection actions until they approve or deny your request. Remember that the IRS will likely hold onto any tax refunds you receive and apply them to your outstanding tax bill.
If your request for an installment agreement is denied, collections will be paused for 30 days. You have the right to appeal this rejection, and during the appeal process, collections will remain on hold until a decision is reached.
Available Payment Plans
The IRS offers tax help to both short-term and long-term payment plans to help taxpayers pay their tax debt. A short-term payment plan lets you pay off your taxes within 180 days. For those needing more time, a long-term payment plan allows you to make monthly payments for up to six years. In this way, you can get tax relief for your IRS debt.
Eligibility Criteria
To be eligible for an IRS installment agreement, taxpayers usually need to meet these requirements:
● File all required tax returns
● Not have any other installment agreements
● Stay current with their estimated tax payments
● Additional requirements may apply depending on the type of installment agreement you choose.
Types of IRS Installment Plan Agreements
The IRS offers four payment plans for tax help to fulfill your needs, which gives you tax relief. Some plans have lower penalties and interest if you pay off your taxes quickly. In contrast, others let you make payments over a more extended period but include additional interest, fees, and penalties. The best plan for you depends on the following:
● The total amount you owe
● The time you need to pay off the debt
1. Guaranteed Installment Plan Agreements
A Guaranteed Installment Agreement is a straightforward and accessible option for taxpayers with $10,000 or less tax debts, excluding penalties and interest. To qualify, you must have filed all required tax returns for the past five years and not had an installment agreement with the IRS.
You must also show that you cannot pay the full tax debt when it is due or within 120 days. Additionally, you must agree to follow tax laws and make timely payments throughout the agreement. To determine your minimum monthly payment, combine your tax liability, interest, and penalties, then divide by 30.
Guaranteed installment agreements must be paid off within three years. If you miss a payment, the IRS may cancel your contract and start collections. To apply, submit IRS Form 9465, Installment Agreement Request, online, by mail, or the best suitable option is to get help from tax resolution experts at VTax services.
2. Streamlined Installment Agreements
A Streamlined Installment Agreement (SIA) is a simple payment plan from the IRS that lets taxpayers pay off their tax debt in monthly installments. Individuals must owe $50,000 or less in combined tax, penalties, and interest to qualify. Businesses must owe $25,000 or less. Add your tax liability, interest, and penalties to find your minimum monthly payment, then divide by 72. This agreement has a setup fee, which varies based on how you apply and plan to make payments.
Streamlined installment agreements must be paid off within 72 months or by the Collection Statute Expiration Date (CSED), whichever comes first. If you miss a payment, the IRS may cancel your agreement and start collections. To apply, submit IRS Form 9465, Installment Agreement Request, online, by mail, or by phone, or the best suitable option is to get help from tax resolution experts at VTax services.
3. Non-Streamlined Installment Agreements
A Non-Streamlined Installment Agreement is an IRS payment plan for those who owe more than the limits for streamlined agreements. Individuals must owe over $50,000 in combined tax, penalties, and interest, and businesses must owe over $25,000. This type of agreement also has a setup fee.
Your monthly payment is based on the financial details you provide in IRS Form 433-F or 433-B, Collection Information Statement. The length of the agreement depends on your situation. After reviewing your form, the IRS will approve your proposed plan or suggest changes.
Once the agreement is active, inform the IRS of any major changes in your financial situation that might impact your ability to pay. Missing payments can cancel the agreement and restart other collection actions.
4. Partial Payment Installment Agreement
A Partial Payment Installment Agreement (PPIA) is an IRS payment plan that lets taxpayers settle their tax debt for less than the full amount. To qualify, you must show that you can not pay the full tax liability, even over time. You must submit a detailed financial statement using Form 433-F or Form 433-B to the IRS. The IRS will review your information and set a monthly payment amount based on your ability to pay. They will re-evaluate your finances every two years. If your financial situation changes, your payment may increase, or the agreement may be terminated.
The agreement stays in effect until the tax debt is fully paid or the collection statute expires, whichever comes first. The CSED is usually 10 years from when the tax was assessed. Be sure to make all payments on time, or your agreement could be canceled, so continue the payment plan; you need expert tax resolution guidance from VTax services.
How Can V Tax Services Help You?
If you do not qualify for a tax debt settlement, an IRS installment agreement might be the best way to manage your tax debt. An Installment Agreement can be a good way to resolve tax issues, but not everyone qualifies, and it might not be the best option for everyone. An experienced tax resolution services provider can discuss your options based on your specific situation and provide tax relief.
If you need tax help, you need help from the experts at VTax Services. They can negotiate with the IRS on your behalf and help propose a payment plan you can afford. The payment plans can be beneficial for taxpayers struggling with debt.
The key is to make all your payments on time. Missing payments could lead to the agreement being canceled and the IRS taking enforcement actions. Make sure the terms of the agreement fit your financial situation. For the best tax relief, the professionals at VTax Services help taxpayers manage their tax debt effectively.
I think I can do that by myself!! Thank you for sharing.