What is an Installment Agreement?
An installment agreement is essentially a payment plan with the IRS. You typically have two options: short term or long term.
Short term Payment Plan
A short term installment agreement is a 180-day payment plan for taxpayers that owe $100,000 or less in taxes, penalties, and interest.
Long Term Installment Agreement
A formal payment option that requires a contract agreement and arrangements with the IRS to pay your tax debt over the 180 day period.
Installment Agreement Requirements
An Installment Agreement often refers to the long term payment plan. There are two types of long term agreements. Each option requires a different application fee.
Pay through Direct Debit (automatic monthly payments from your checkings account), also known as a Direct Debit Installment Agreement (DDIA).
Online Fee: $31 setup fee
Apply by Phone, mail, or in-person: $107 setup fee
Low Income: Set up fee may be waived
Other Installment Agreement Requirements
Here are few helpful tips to keep in mind before you enter an installment agreement:
There is a lot to consider before you enter an installment agreement. As easy as payment plans are to set up, you may qualify for a tax relief program that is significantly better than a payment plan such as tax debt reduction or tax debt elimination.
Benefits to an Installment Agreement
A tax levy is when the IRS takes your property to sell and apply that money to your tax debt. An installment agreement prevents a levy.
the IRS can’t take anything from you aside from the agreed amount in the Installment Agreement.
An installment plan can easily be set up online, but speak with a tax professional first. You may qualify for a lower monthly payment than what the IRS is telling you!
What to Know About Setting Up An Installment Agreement
They may not take your property with a levy, but they can claim interest on your property with a lien.
regardless of your agreement, penalty and interest fees will continue to build up as you pay your debt.
The IRS wants your tax debt paid as soon as possible. Any tax refund you receive from your tax return, the IRS applies it to your debt.
Setting up an Existing Plan
If you have an existing plan, you can change the agreement to a lower monthly payment by speaking with a tax pro. It is important to speak with your tax advisor first before changing your plan with the IRS because you may not receive immediate approval. We can submit the proper paperwork on your behalf to lower your monthly payment.
What Better Options Are There?
An installment agreement isn’t the true end game of IRS tax debt. It is essentially the bare minimum that the IRS is willing to do before they consider looking at your finances and what you owe. The other tax relief options available reduce, pause, or even eliminate your taxes.
Fresh Start Program
The Fresh Start Program was created by the IRS in 2011 to assist taxpayers struggling to pay their taxes.
Speak with A Tax Professional
There are so many better programs you may qualify for. An installment agreement is just the surface of what the IRS considers tax relief. You may reduce your tax debt, pause the IRS collections from taking your property, significantly reduce your monthly payment, and so much more. America’s Choice Tax will negotiate with the IRS to make sure your monthly payments are fair to your livelihood and that you receive every possible tax relief program available to your situation. Our tax professionals work tirelessly to give you the best possible tax resolution allowable..