When an IRS Installment Plan Makes Sense

If you have outstanding debts with the IRS, one the most important things to remember is that the IRS wants to work with you to settle your debt and even provides options to help you do so. One of these options is called an installment agreement. An installment agreement is like a payment plan, and it enables you to pay off your tax debts over time via monthly payments. There are several different types of installment plans and unfortunately, not everyone is going to be eligible to enroll in one. Below we discuss the scenarios in which an IRS installment plan is a good option for you.

1.  You have filed your tax returns

The first step in order to qualify for an installment plan is to file all required tax returns and to be current on your estimated tax payments. If you haven’t met these basic requirements, then an installment plan isn’t even an option for you.

2.  You have low amounts of debt.

If you have under $10,000 of debt, then you can apply for what the IRS calls a Guaranteed Installment Agreement. For starters, the IRS is guaranteed to accept your application (hence its name) and, if it’s well under the $10,000 mark, you might even be able to enter into a short-term plan. A short-term installment agreement means you pay your debt in 120 days or less. These are ideal because there are no additional IRS fees (besides your accrued penalties and interest).

3.  You owe less than $100,000

If you need more than 120 days to pay and owe more than $10,000 but less than $100,000, then a Streamlined Installment Agreement might be a good option. Although your acceptance isn’t guaranteed, the IRS’s application check isn’t too in depth. Streamlined plans require your full repayment within 72 months if you owe less than $50,000 and within 84 months if you owe less than $100,000.

4.  You owe up to or more than $100,000

Although installment plans are still available if you owe up to or more than $100,000, the IRS requires more information as the amount of debt increases before they will approve your application. You will still need to pay your debt within the 10-year collection statute, but it is still a decent option if you have adequate income coming in to make this plan work.

Speak with an experienced tax attorney today

Dealing with the IRS doesn’t have to be terrible. There are several options in place for people who have more tax debts than they can handle right away. At Boeshaar Law, we regularly help our clients get out of debt and know what to do depending on your situation. If you have outstanding debts with the IRS and need help figuring out your next step, contact us at (206) 899-4860 today!

Written by Robert V. Boeshaar

Robert V. Boeshaar

Robert V. Boeshaar is a Seattle tax attorney committed to helping individuals and small businesses who are facing problems with the IRS. He believes in using his experience to serve others and to make a difference in their lives.