Common Mistakes in How To Set Up a Payment Plan with the IRS

When you first call the IRS to set up a tax payment plan, or a tax installment agreement, the first question naturally asked is “Who Am I Speaking To?” IRS Collection agents will often deal much differently with paid professionals in exploiting what you don’t know and often taking advantage of you. Its not that they’re bad people – they’re not. They’re simply doing their job. Their goal is to collect as much as they can and as fast as they can do it. Each call is thoroughly documented so if you call back, the next agent should know exactly where you left off.

The second question asked is “Where Do You Currently Live?” Although this seems quite appropriate, this may not be a question you want to answer. Try avoiding this without professional representation! Providing them with your home address will certainly let them know where to find you if you don’t settle your tax problems. This is not to say that you shouldn’t provide this information, but be just how prepared would you or your spouse be if an agent suddenly showed up at your door.

The third group of questions asked is “Where Do You Bank?”, “How Much is In Your Account?” followed by “Who Is Your Employer?” Answer these three questions and now the IRS now knows exactly where they can levy your account for taxes you owe and how to garnish your wages if you don’t settle your tax problem. Ever think what it will be like sitting in front of your boss when he tells you he got a letter from the IRS garnishing your wages?

The fourth question asked is “How Much Can You Pay Now?” You just told the collections agent where your bank account is, how much is in your account and now you say you don’t want to pay anything now? Good luck with that one. As helpful as the agent may appear, their ultimate goal is one of collecting as much as they can and as fast as they can do it. Don’t expect otherwise!

The fifth question asked is “How Much Can You Pay Monthly?” This is the most common mistake do-it-yourselfers make in making payments to the IRS. They always say an amount that’s too high, then ultimately can’t make their payment at some future date and lose their entire rights to the payment plan they negotiated. Whatever you do, never do this! Always offer to pay the IRS less. If the IRS wants more, they’ll let you know. If you can’t make the payment they want, there are other options available to you. Don’t be bullied into agreeing to pay an amount you can’t.