IRS Installment Agreement


What is an IRS Installment Agreement?

An IRS installment agreement is one strategy that can be used by taxpayers who owe back taxes and tax penalties. Taxpayers who are experiencing hardships due to the economy and its related problems simply cannot come up with the full amount of back taxes owed to the IRS and therefore need to know their tax settlement options—one such option is to set up an IRS payment plan.


IRS Installment Agreements Stop Penalties from Accruing (but not the Interest)

The IRS installment agreement can be a godsend, but it should be worked out in a way that offers you the best advantage. A tax attorney for other tax professional can help you to negotiate the lowest amount of back taxes owed so that you do not end up paying more taxes and penalties than owed. For example, the IRS may have incorrectly calculated your back taxes debt, or you may be eligible for tax abatements. Some taxpayers will blindly sign an IRS installment plan and lock themselves into a payment plan that is based on incorrect tax assessments or is overbearing.

A tax attorney can help you to work out an IRS installment agreement that you can live with. Although an IRS payment plan can be set up to be paid over a 3 to 5 year period, the IRS can cancel the agreement unilaterally if fail to make payments on time or if you fail to provide them with updated financial statements and records as may be required. If the IRS cancels the IRS installment agreement they can then enter a tax lien against you, and levy your bank account and income. This is why it is best to negotiate a workable IRS payment plan from the beginning.

Bottom line, a tax attorney or other tax professional can help you to determine the best tax settlement option for you and negotiate an IRS installment plan, offer in compromise (or other tax tips and strategies) that will work best for you.