How Do You Avail Installment Agreement Plan from IRS for Your Tax Debt
How Do You Avail Installment Agreement Plan from IRS for Your Tax Debt
Tax audits and its lengthy procedures with the IRS (Internal Revenue Service) can be real tidy if you are not able to pay proper attention during the tax report preparation. How much toil you have to pass through essentially depends on certain factors like your income, reported tax deductions etc. Remember when you are audited there are certain guidelines and post-audit appeal process with the IRS. In Fact your case may be taken to the US tax court or beyond even required for your individual account or business purpose.
During this whole proceeding you may run short of liquid money to pay the tax to the IRS. But never get perplexed as you have an option to work out an arrangement with the IRS to pay the installments.
When you can avail the installment plan?
Before you ask for the tax debt, check whether you have filed the returns and paid your taxes for the last five years.
If you are self-employed person verify your status on quarterly estimated tax payments to make in coming days.
You have to promise to file tax returns and pay all due taxes while the installment agreement is in vogue.
This should be your first installment agreement plan with IRS in last five years.
what are the debt ranges and the qualifying criteria?
Generally three types; if you owe $10,000 or less excluding any fines or interest and think you can repay the entire amount with in three years, you are eligible for the a guaranteed installment plan agreement.
For the debt amount less than $25,000, IRS would offer you streamlined installment agreement plan. But for this you have to promise the repayment with in five years or so.
For more than $25,000, the IRS would ask extensive financial information from you. This is to enable you negotiate for an installment plan.
Does such Installment plan favor you?
Obviously, the positive point is that you need not to ponder over for your bank account being seized by IRS or your property being detained by IRS to pay the due taxes. The major disadvantage is that penalties and interests would be accrued over time and added to your actual debt amount, while you are paying the debt. Effectively you end up paying more than the load you could pay right way.
How will you negotiate an Installment agreement plan with the IRS?
You can start the process by sending form 9465. If you are not confident about the affordable monthly installment you should pay, IRS would decide how much discretionary amount you have after paying your necessary living expenses. This left over money can be used to pay your tax debts.
The IRS can also reject your installment plan offer if their personnel think that the amount you have shown as living expenses are not all necessary. In that case IRS would send you a formal rejection letter. It may also happen if you have provided the wrong or incomplete information in the application form. But again to appeal the rejection of your installment proposal you can file a written appeal with in 30 days of the IRS rejection letter. Meet your Tax lawyer or an IRS attorney from Washington DC if you held from Washington DC and looking for the alternatives.
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