The Collections Division of the Internal Revenue Service (IRS) represents the government’s interest in collecting taxes. The IRS will strive to collect all amounts due and as quickly as possible. Depending upon the collection potential of each taxpayer, the IRS will help taxpayers to negotiate agreements to pay their taxes over time.

Whether you call it an installment agreement, payment agreement or payment plan; the idea is the same – you are requesting to make payments on the taxes you owe.

When you can’t pay your tax debt in full, an installment agreement can be a reasonable payment option. Installment agreements allow for the full payment of the tax debt in smaller, more manageable amounts.

Types of Installment Agreements

IRS collection procedures classify the deferred payments into the following major categories;

  • taxpayers who can pay all tax liabilities now,
  • taxpayers who can pay over time and owe less than $25,000,
  • taxpayers who can pay over time and owe more than $25,000,
  • taxpayers who can make partial payments for less than the full amount owed, and
  • taxpayers who cannot pay anything currently

The IRS will generally dictate how much you need to pay and when.

Taxpayers Who Can Pay All Tax Liabilities Now

Whenever possible, paying your tax debt now is sometimes the best option. Full paying your tax liability will usually get you off the IRS radar and let them concentrate on individuals other than you. If you pay now, you can avoid incurring additional penalties and eliminate the interest that accrues. Wherever possible, find other sources of financing – not the IRS. Its just not worth it!

Taxpayers Who Owe Less than $25,000

Taxpayers who owe less than $25,000 and need to pay over time are generally given fairly liberal payment plan options to pay the tax debt owed. By completing certain applications and paying a small fee, you can generally qualify.

Applicants will need to disclose certain financial information for a determination of your payment amount and the length of payments required. The terms and conditions are often negotiable if you meet the minimum payment criteria. You can also pay a far lesser amount where financial hardships are present. Professional representation is recommended to obtain the most beneficial terms available.

Taxpayers Who Owe More Than $25,000

Taxpayers who owe more than $25,000 are subject to a more strict set of criteria and financial disclosure. IRS Collection Agents will be very aggressive in the collection of your taxes; especially where you have been unresponsive or have the ability to pay your taxes or a large portion of these taxes now.

It does not matter that you may have other business or personal priorities and that you have the best of intentions to pay these taxes at some other time. It is the IRS agent’s job to protect the government’s interest and will often be quite aggressive in the collection of these taxes.

You will usually need expert, professional representation which will require proactive intervention, representation of your financial condition and an advocate to protect and help secure your rights.

Taxpayers Who May Never Be Able to Pay Their Taxes

Taxpayers who owe more than $25,000 and may never be able to pay their taxes may be able to settle their taxes for considerably less than the full amount owed. Similar to bankruptcy provisions which give debtors a fresh start, qualifying taxpayers may be able to permanently escape the payment of these taxes. This benefit, also known as an Offer in Compromise, generally requires the assistance of CPA, with unique qualifications and experience, in the determination of the availability of these relief provisions, other factors of consideration in determining the offer amount, and the structuring of a payment or series of payments necessary to meet these guidelines.

How We Can Help You

Call us today for help to solve your IRS problems. We can help you to understand your obligations and rights, negotiate settlement terms and provide professional, experienced, knowledgeable representation before the IRS.