Installment Agreement

What is an IRS Payment Plan or Installment Agreement? An IRS Payment Plan, also known as an Installment Agreement, is a program that allows taxpayers to pay off their tax debt over time. This is especially helpful if you're unable to pay your tax debt in full by the due date.

Types of Installment Agreements There are several types of agreements, and the right one for you depends on your specific financial situation:

1.  Short-Term Payment Plan: Suitable if you can pay your debt in full within 120 days. There's no setup fee for this plan.
2.  Long-Term Payment Plan: This is for larger debts or when you need more than 120 days to pay. There may be a setup fee, and the IRS offers different payment methods, including direct debit, which can reduce the setup fee.
3.  Partial Payment Installment Agreement: If you're unable to pay the full amount, this plan allows you to make smaller monthly payments. The IRS reevaluates the agreement every two years.
4.  Guaranteed Installment Agreements: Available if you owe less than a certain amount (usually $10,000) and meet other criteria.

Benefits of an Installment Agreement

• Manageable Payments: It breaks down your debt into smaller, more manageable   monthly payments.
• Reduced Penalties: While interest and late-payment penalties continue to

              accrue, an installment agreement can lower the failure-to-pay penalty.

• Avoidance of More Severe IRS Actions: Entering into an agreement can

              prevent more severe actions like tax liens or levies.

Applying for an Installment Agreement

• Eligibility: You must file all required tax returns and owe $50,000 or less in

              combined tax, penalties, and interest.

• Application Process: You can apply online, by phone, or by mail. I can assist you with this process, ensuring that we choose the most suitable plan for your situation and complete the application accurately.

Your Responsibilities Once your plan is in place, you must:

• Make your payments on time.
• Stay current with all future tax obligations.
• Understand that any future refunds will be applied to your debt until it's paid off.

My Role as Your CPA As a CPA, I can help you:

• Determine the best type of payment plan based on your financial situation.
• Navigate the application process.
• Negotiate the terms with the IRS.
• Ensure you stay in compliance to avoid defaulting on the agreement.

Conclusion Setting up an IRS Payment Plan can be a practical step towards resolving your tax debt. It's important to address this matter proactively, and I am here to provide expert guidance and support throughout this process.