If you owe taxes to the IRS or the state, an installment agreement may be an option to satisfy your debt after all of your tax returns have been filed, and the total amount of tax liability has been determined. If you do not have the financial ability to pay the tax you owe at the time it is due, then an installment agreement may be the best option. To qualify, you generally must provide certain financial information, including your monthly income and expenses, which will allow the IRS or the state to determine your ability to pay based on your disposable income.
Installment plan negotiations can be a very detailed process, and generally require documentation to substantiate the income and expenses reported. While your ability to pay is a function of your monthly income and expenses, many expenses are likely to be limited based on various IRS national and local standards. Certain exceptions may apply, so it is advisable to seek the assistance of a tax attorney that is experienced in dealing with these matters.
Once an installment agreement is established, the government will cease forced collection actions, such as levying bank accounts or wages, as long as you remain compliant with all future tax filings and make all payments in a timely manner under the terms of the installment agreement. Although your property will not be levied or seized (with the exception of future tax refunds), federal tax liens may be filed to secure the government’s interest in your property in case of a default — whether a lien filed is dependent on the total amount of tax that is owed.
Currently Not Collectible
It may be possible to enter into “currently not collectible” status with the IRS and some states. To qualify, your income must generally be lower than your allowed expenses, leaving virtually no money left for the government. If “currently not collectible” status is a viable option, the government will recognize your financial hardship and agree not to collect any payments until your financial circumstances change.
Fresh Start Program
Under the Fresh Start Program, access to streamlined installment agreements has increased significantly. With the streamlined process, the IRS will typically agree to a payment plan that will pay off the tax debt in full over a 72-month period, without requiring an extensive amount of financial information. Taxpayers owing up to $50,000 qualify for the streamlined process.
Contact an Experienced Attorney in Roseville, California
If you are hoping to stop collection actions while you regain financial stability, we encourage you to seek guidance from a tax attorney at the NewPoint Law Group, LLP. To schedule a free consultation, call us at 800-358-0305 or contact us online today.