IRS Installment Agreement

IRS Installment Agreements: Satisfying a Tax Liability With Ease

IRS Installment Agreements
IRS Installment Agreements

When you receive notification from the IRS that you have income taxes owed, dependent on the amount and your individual situation, taking care of that amount may be a difficult task to handle all at once. While interest on your tax liability continues to accrue, the last thing that anyone needs is to check their pay stub and find that they’ve been subject to a garnishment. The easiest way to satisfy a tax liability outside of an immediate payment of the amount is to enter into an IRS installment agreement.

The IRS has several different types of installment agreements, and these installment agreements are available to the taxpayer if they meet the qualifications.

Guaranteed IRS Installment Agreement

There are several advantages in entering a guaranteed IRS installment agreement – especially p if you have a tax liability with the IRS. First of all, when entering the installment agreement, the IRS commits to not taking out a tax lien against you. This means that you can breathe easily knowing that you can satisfy your tax debt without an adverse effect on your credit or fear of a garnishment. Additionally, in contrast with some of the other IRS installment agreements, the IRS will not require a taxpayer entering into a guaranteed agreement to provide information on your current financial status.

If you meet the following qualifications, the IRS is required to allow you to enter a guaranteed agreement:

  • If the liability balance owed to the IRS is less than $10,000
  • If you have no outstanding tax returns
  • If you have not had a late filing or paid your taxes late in the last five years
  • If you have not entered into an installment agreement with the IRS in the last five years
  • If by entering into the installment agreement, your tax liability will be satisfied in 36 months or less.

Although a guaranteed IRS installment agreement is the easiest to enter into, this type of agreement might not fit your individual tax situation. If a guaranteed IRS installment agreement is not a possibility for your particular circumstances, there’s no need to panic. Luckily, there are several other types of agreement that may be more appropriate to your situation.

Streamlined IRS Installment Agreement

If your owed tax liability is $50,000 or less and the liability can be satisfied in 6 years or less, a streamlined IRS installment agreement might be an option for you. This type of installment agreement requires that you file any outstanding tax returns and commit to filing and paying your taxes on time in the future.

As with the guaranteed IRS installment agreement, the IRS commits to not filing a federal tax lien or requiring a financial statement when you enter into this type of agreement.

Partial Payment and “Non-Streamlined” IRS Installment Agreements

When your tax liability situation does not fit the situations that qualify for the IRS installment agreements listed above, a partial payment or a “non-streamlined” IRS installment agreement might be one of your options. There are several important difference in these payment options compared to the agreements previously discussed.

In either the IRS installment agreement set up for partial pay or the non-streamlined IRS installment agreement, the IRS will require a financial statement so that they have the ability to assess what you might be able to pay. Additionally, with both of these installment agreements, the IRS does not ensure that they will not file a tax lien against you, if they already have not. When entering into either one of these types of installment agreements, it is important to know your risk of exposure and to act accordingly.

Discovering that you owe income tax to the IRS can be an unpleasant and confusing experience. In many cases, it may be impossible to pay off the full balance of your debt all at once. If you are not able to pay the full amount immediately, there are a number of options that you may pursue. Each of these options has differing qualifications that must be met, and each one is associated with a variety of risks and benefits. With any type of IRS installment agreement, it is wise to seek the advice of a qualified tax attorney so that you can make an informed decision on which installment agreement will fit your needs, and if any other options are available. Let be your first choice when seeking tax guidance.