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Manage Your Tax Payments through an Installment Agreement
By Darrin Mish of Law Offices of Darrin Mish
Many people notice that they owe the IRS substantial amounts of money only after they have filed their annual tax returns. Soon enough, the realization hits that they don't have the sufficient funds needed to pay such a large debt. However, there are other options or methods that can help make that IRS tax debt more manageable. Among these methods is the setting up of an installment agreement with the IRS, which is essentially, a payment plan with the Federal Government. The IRS is very much open to accepting applications for monthly payments. In fact, they even allow you to pick the amount you would like to pay on a monthly basis and on which date that it is due. If your total tax due does not exceed $10,000, have been a conscientious taxpayer and have somehow demonstrated that you don't have a considerable amount of money readily available, there is a good chance that your request for an installment plan will be approved. The primary consideration in your installment plan is that it should have the ability to pay off your total tax dues in three years. The first step in this process is filling out of Form 9465 (Installment Agreement Request Form) and attaching it to your tax return. Taxpayers who are considerably financially strapped are also given the option to make partial payments of tax liability. Although slightly different from the one mentioned above, this is an installment plan, nevertheless. Specific financial details such as information on equity assets are required from those who would like to avail of this partial payment installment agreement. The IRS will definitely verify all of the provided data so it is best to make sure that they are all accurate and truthful. Also, to check if you are already in a better financial standing and to see if partial installment payments are not anymore necessary, the IRS will conduct a re-assessment every two year. The amount of each monthly payment may also be increased or the agreement may be terminated altogether. The only disadvantage of installment options is the fact that the longer you stretch your payment agreement, the more money you will be required to pay the IRS. This is because you are essentially buying time from the IRS to pay the amount you owe them. Certain fees are also associated with any installment agreement. The IRS charges you with a one-time amount of $105 for an approved installment plan. The fee is lowered to $52 when you get a direct debit agreement, which requires you to debit monthly payments from your bank account. The fee even goes to as low as $43 is you meet the criteria for the lower income bracket. While setting up installment plans appears to be a very attractive option, other taxpayers see it in a different perspective. For them, the better solution is an Offer in Compromise, or OIC, which allows them to lessen their total tax dues as the remaining percentage is forgiven. However, if tax problems necessitate the use of any of the mentioned options, it is always best to seek professional assistance regarding this matter. |
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