IRS Installment Agreement Lawyer
If you can’t afford to pay your tax debt in full, you can request to pay it over time through a series of payments. The IRS offers installment plans specifically for this purpose. Installment plans help make a large tax debt seem less onerous; before you know it you’ve already paid the whole amount. Although the IRS prefers that you pay the amount in full quickly, this isn’t really a viable option for everyone.
Sacramento tax attorney Jin Kim helps clients secure installment plans with the IRS and FTB. To learn more about tax resolution strategies and how you can get out of tax debt call her office at (916) 299-9913 for a free consultation.
An installment plan differs from an offer in compromise in that the debt is expected to be paid in full through an installment plan. In an offer in compromise, the debt is reduced in exchange for prompt payment. Neither of these options is better than the other. It depends on the taxpayer’s situation. Some taxpayers may be able to pay in full a reduced amount quickly while others may need a longer time to find the money to pay the tax debt. In order to best assess your options, it’s a good idea to consult with an experienced tax lawyer regarding your situation. A tax lawyer will be in a better position to advise you regarding your options.
2 Types of Installment Plans
There are two kinds of installment plans: a short-term installment plan and a long-term installment plan. Which plan is feasible will depend upon the facts of your case.
Short Term Installment Plans
A short-term installment plan has a time frame of 180 days or approximately six months. There are lesser fees associated with a short-term installment plan. Individuals who request an installment plan online of 120 days or less don’t have to pay the setup fee. The same holds true for taxpayers who request an installment plan through phone, mail, or in-person methods. Take note that as of the 2020 Covid-19 pandemic, only individuals may file online for a short-term installment plan. If you’re a corporation or business, you’d have to apply through the phone, through the mail, or in person. In a short-term installment plan, interest and penalties will continue to run until the amount due is paid in full.
Long Term Installment Plan
Long-term installment plans are the second type of IRS installment plans. Technically, they are referred to as Installment Agreements. An installment agreement is an installment plan that goes beyond 180 days. There are additional IRS installment agreement fees to be paid when you choose a long-term installment plan, depending on the method of application. Some penalties may be suspended while a long-term installment agreement is being paid, but interest will continue to run until the full amount is paid.
When choosing the best plan for you, it’s important to take into consideration your situation. For example, if you’re about to receive a cash infusion within 180 days, the better option for you is to choose a short-term installment plan. If you’re having liquidity problems at the moment and you’ll need a longer time to pay the tax debt, then the better option would be a long-term installment plan.
Method of Payment
There are several payment methods to choose from when you’re applying for an installment plan. The IRS primarily prefers the direct debit method, where an amount is deducted from your bank account monthly. If you’re an individual, payroll deduction is the most preferred option by the IRS. However, the following options are also possible:
- Payment by EFTPS,
- Payment through credit card via phone or Internet,
- Payment through check or money order, or
- Cash payment at a retail partner.
Lastly, if you’re planning to apply for an installment plan, you should check to see if your payment and filing requirements are current, as the IRS will also take those into consideration.
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