What Are Installment Agreements?

Installment agreements provide a way to pay what you owe to the IRS through a monthly payment plan. For many taxpayers with large back tax bills, paying what is owed at one time is impossible. Installment agreements make payments much more manageable and can be a viable alternative if you do not qualify for an offer in compromise or other tax liability relief. A tax lawyer in New Jersey can help you negotiate an IRS installment agreement you can afford.

Important Considerations About Installment Agreements

If you are considering entering into an IRS payment plan, there are some facts that New Jersey tax attorney Todd S. Unger wants you to know about getting IRS help:

Tax payment plans may not be your most affordable option because interest and penalties continue to accrue throughout the payment plan. Consequently, you may find that borrowing against your assets to pay everything at once is a better option than executing an IRS payment plan. It would be best to discuss your options with your tax lawyer.

Some lending options, like a second mortgage, may offer the benefit of tax-deductible interest, whereas the interest and penalties on installment agreements are not deductible. Borrowing against, not withdrawing money from, a qualified retirement plan can also effectively reduce your tax debt. There can be other financing options available to resolve your tax debt. You should discuss your options with a tax lawyer to achieve the fastest and most cost-effective way of eliminating your back taxes.

If you do not have the credit or assets to borrow, you may need to negotiate your IRS installment agreements.

Types of Installment Agreements

• Guaranteed Installment Agreement: If you owe $10,000 or less to the IRS, excluding penalties and interest, all your returns are filed, and you have not been in trouble with the IRS in the past five years, you have a statutory right to an installment agreement as long as you can pay the amortized balance in full within 36 months. In most cases, the IRS will not file a tax lien as long as you comply with the terms of the installment agreement.
• Streamlined Installment Agreements for $25,000 or Less: If you can pay the back taxes you owe within 72 months, the balance owed is $25,000 or less, and you are current with all your filing requirements, then you can execute a payment plan with the IRS without disclosing your finances. The $25,000 threshold excludes assessed penalties and interest, including individual and corporate income taxes and the trust fund recovery penalty. With a streamlined installment agreement, it is possible to negotiate the avoidance of a tax lien.
• Streamlined Installment Agreements for $25,001 to $50,000: If the back taxes you owe for all tax years are between $25,001 to $50,000, you can pay the amount owed within 72 months, and are current with all filing and payment requirements, then you can request streamlined installment agreement as long as you permit the government to debit from your bank account directly. Assessed penalty and interest are not included in calculating the dollar criteria. You can pay off income taxes, individual or corporate, and the trust fund penalty through a streamlined installment agreement. If you execute this installment agreement before the IRS files a tax lien, you can avoid one from being filed in the future as long as you stay compliant.
• In-Business Trust Fund Express Installment Agreements: If you have a small business with employees, you may be eligible for this type of IRS payment plan. The advantage of an In-Business Trust Fund Express Installment Agreement is you do not need to complete a financial statement or financial verification as long as the taxes you owe are $25,000 or less at the time the agreement is established, and you can pay the amount owed within two years. To be eligible, your business must comply with all of its filing and payment requirements and enroll in a direct debit installment agreement if the unpaid balance of assessments is between $10,000 and $25,000.
• Partial Payment Installment Agreements: The IRS generally has ten years to collect back taxes. If a payment plan does not fully pay the taxes owed within this period, but you can pay back some of the taxes you owe, you can attempt to negotiate a partial pay installment agreement. These are difficult agreements to execute because the IRS will require financial disclosure and verification of assets, liabilities, income, and expenditures. The IRS will also require filing a Notice of Federal Tax Lien. Additionally, the government will reopen the case later to ascertain whether your ability to pay has increased.
• Non-Streamlined Installment Agreements: If you do not qualify for or cannot afford the above IRS payment plans, you must complete an exhaustive financial disclosure and verification. Generally speaking, you will negotiate these payment plans with a local IRS collector known as a Revenue Officer. The Revenue Officer will ascertain your ability to pay, possibly require liquidating assets, and eliminate or reduce household expenditures. In most cases, the IRS will file a tax lien to secure its interests against other creditors.

Negotiating an IRS Installment Agreement

The IRS will not negotiate with you if you have failed to file your tax return in a previous year or are not current with your estimated tax or payroll tax deposit requirements. Once an installment agreement is executed, you must fully comply and pay all future taxes when due. You should discuss your contractual obligations and responsibilities with the IRS and an NJ tax attorney to ensure that you understand your responsibilities under such agreements. Failure to comply with the contract terms can result in enforcement action and filing a tax lien. You should discuss any outstanding returns with your NJ tax attorney to ensure you do not face any challenges when negotiating with the IRS. Remember, the IRS is unlikely to back down when owing any back taxes.

When requesting an IRS installment agreement, you may need to disclose your assets, including cash and bank accounts, liabilities, income, and expenditures. If your request is accepted, you will continue. If you cannot pay the IRS, a tax attorney can analyze your circumstances and advise and execute the best course of action. The Law Offices of Todd S. Unger, Esq. provides a confidential consultation. To resolve your back taxes, complete the above contact form or call tax lawyer Todd S. Unger, Esq. today at (855)-896-1566.

The IRS may still be able to file a Notice of Federal Tax Lien against you while your installment agreement request is pending or in effect. However, as long as you are tax compliant, the IRS cannot seize your property or wages or levy your bank accounts while the installment agreement offer is pending or you are compliant with the terms of your installment agreement.

IRS Installment Agreements & Payment Plans Lawyer