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Tips For a Successful IRS Installment Agreement
One of the main functions of the IRS is to assess and collect all federal income taxes due. The IRS has substantial authority and power that was given to it by Congress to carry out its goals. With these powers and the substantial financial resources that have been assigned, the IRS is essentially the world?s largest and most powerful collection agency.
If bankruptcy or an offer in compromise is not an option, a taxpayer should consider an installment agreement. When trying to establish an installment agreement, the taxpayer must have reasonable negotiating skills. The IRS wants to collect the entire balance due as soon as possible, while the taxpayer is in need of a payment that works within their budget and that does not cripple them financially.
One of the most popular programs is the IRS Installment Agreement. This program allows the IRS to establish a monthly payment plan with the taxpayer that is based on the taxpayer?s tax liability and how much they can afford to pay in monthly installments.
The advantage to the installment agreement is that it will put an end to any collection efforts that the IRS was undertaking. This includes tax liens, levies, garnishments, and collection calls. But interest and penalties will continue to accrue on any unpaid balance throughout the entire installment agreement period.
If the taxpayer cannot pay his or her entire tax liability and does not qualify for an offer in compromise or a currently not collectible status, an installment agreement may be the next best choice. If the balance that is owed is less than $25,000 the process becomes a lot easier and the IRS generally has a great willingness to get it completed.
Just make sure that before you instigate an installment agreement, you make sure that you are current on all tax filings. The IRS will make this a condition of the installment agreement.
By aggressively negotiating with the IRS and working diligently, most taxpayers with back tax issues can reach an installment agreement. They may need the assistance of a tax attorney or a CPA to get it done, but the goal is to get an installment agreement that works within your financial budget.
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