IRS Installment Agreement

An IRS Installment Agreement may be your best option.  The process isn't automatic and there may be alternatives, but if you are eligible, this could be the solution that makes paying taxes easier. If you cannot pay the full amount of the tax due and other options such as offer in compromise do not seem viable then you may ask to make monthly installment payments. 

You will be charged interest and a late payment tax penalty by the IRS on the tax not paid. Interest rates vary because they are set quarterly. The current annual interest rate, as of  January 17, 2007  is 8%. The penalty on installment agreements is .25% per month or three percent annually so the combined penalty and interest is 11%, not such a good deal compared to some alternatives that might be available such as a bank loan.

Before requesting a tax  installment agreement from the IRS, you should consider less costly alternatives, such as a bank loan, for example the interest on a bank loan may be less than the combination of penalty and interest on an installment agreement with the IRS. To figure this out you will need to know how much interest the IRS will charge

Partial Pay Installment Agreements

Requesting a partial payment installment agreement with the Internal Revenue Service can be one way to get out of paying all of the debt and it is easier to do and less time-consuming and less expensive than requesting an offer in compromise.  In a partial-payment installment agreement, the taxpayer makes regular monthly payments to the IRS, but the payments do not pay off the tax debt in full. After the terms of the installment agreement are fulfilled, the remainder of the tax debts are forgiven. Partial-payment installment agreements are a relatively new way to get out of tax debt.

If you are considering a partial pay you should look for a tax professional with significant experience in IRS collection matters. It is best to get all your ducks in a row before broaching the subject with the IRS primarily because you will want to use the statute of limitations to get rid of the debt and you do not want the IRS to extend the running of the statute. The IRS may require you to provide detailed financial information prior to agreeing to an installment payment agreement.

 The IRS will use this information to determine how much they think you can afford to pay AND, that information becomes a road map to your assets in the event they later decide to levy on your assets.

Negotiating a monthly installment agreement should never be done without an overall game plan in mind.  I will  help you to understand the complexities of Partial Pay Installment Agreements versus standard Installment Agreements as they related to your Statute of Limitations and your Collection Statute Expiration dates. To help you understand  more about how these operate I have included direct links below to the IRS web site that explains many of the details and outlines the complexities including specific examples to help you understand how all this works.

Ignoring your tax problems only makes matters worse because your case is progressing through the IRS collect process, unrelentingly, and the sooner you take action the easier they are to work with. If your case progresses to ACS and beyond then it can be much more difficult to get resolution. Don't hesitate. Sooner is better than later. Take action now.  

You can call me at (941) 723-9106, I take as many calls as I can, if I can't answer when you call, just leave a message with your contact information and I will call you back as soon as possible, almost always within 24 hours.

Also, you can email me at ralphs@tampabay.rr.com.