The IRS Installment Agreement

Among the many ways taxpayers may resolve a tax debt with the IRS, the Installment Agreement is a popular choice.  Installment Agreements allow a taxpayer to make monthly payments towards a tax debt and often also reduce the amount of penalties and interest that must be paid.

The IRS does set forth conditions that must be met to qualify for an agreement:

  • All income tax returns must be filed,
  • All employment tax returns must be filed,
  • Payroll taxes must have been paid for the most recent quarter, and
  • One must file a Financial Statement in certain situations depending on the amount owed.

There are several different types of Installment Agreements.  If the amount of personal taxes owed is less than $50,000 (this has been raised to $100,000 until September 30, 2017), and the taxpayer agrees to a direct debit agreement, the IRS will agree to a streamlined installment agreement.  The IRS will approve a streamlined Installment Agreement to pay over a time no greater than six years if the amount due is under $50,000.  If the amount due is over $50,000 and under $100,000 the installment agreement must pay the taxes within seven years.  If the amount owed is over $100,000, the taxpayer must file a Financial Statement and may have to negotiate the terms of the Installment Agreement with a Revenue Officer.

If you owe taxes to the Internal Revenue Service, call us to schedule a free, 15-minute consult today, and we will help you determine if an Installment Agreement is the best course of action in handling your tax matter.

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