When you owe money to the IRS, penalties and interest can add up, and eventually, the IRS can collect the money you owe with forced collection actions such as liens, levies, wage garnishments and asset seizures. If you owe back taxes, it’s best to pay the IRS as soon as possible or work out a suitable payment arrangement. Several different payment arrangements are available if you qualify (for example, the Offer in Compromise, Installment Agreement and Currently Non-Collectible Status), and by far the most common of these is the Installment Agreement.
Installment Agreements come in several different shapes and sizes. Typically, most individual clients qualify for one of two different types of Installment Agreements: 1) the Guaranteed Installment Agreement, and the 2) Streamlined Installment Agreement.
To qualify for a Guaranteed Installment Agreement, you must:
To qualify for a Streamlined Installment Agreement, you must:
What About Penalties and Interest? For all installment agreements, the IRS charges penalties and interest until the balance is paid in full, so it’s in your best interest to pay the IRS as soon as possible. To avoid continuing penalties and interest, you may be better off borrowing the money from another source to pay the IRS. Some possible sources of funds include a re-financed home or second mortgage, a low interest credit card, a re-financed automobile, or friends and relatives.
Regardless of which option is appropriate for you, most important is finding counsel qualified to assist you with choosing your Installment Agreement and completing the appropriate paperwork with the IRS. For assistance with resolving your outstanding IRS tax debt, please give me a call at (757) 687-8888.