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Installment Agreement (IA)
Installment Agreement is a payment arrangement in which the taxpayer can pay a fixed monthly amount for the tax owed to the IRS. This is another type of payment arrangement option for the taxpayers to eliminate their tax debt.
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FIND OUTWhat is an Installment Agreement?
Installment Agreement is a payment arrangement in which the taxpayer can pay a fixed monthly amount for the tax owed to the IRS. This is another type of payment arrangement option for the taxpayers to eliminate their tax debt. Installment agreement can be requested with the IRS by submitting Form 9465. The taxpayer should keep in mind that there is an accrual of penalties & interest during the installment agreement period. There are various types of installment agreements .
- Guaranteed Installment Agreement
- Streamlined Installment Agreement
- Non Streamlined Installment Agreement
- Partial Payment Installment Agreement
Guaranteed Installment Agreement
Following are some of the conditions where the IRS must accept the installment agreements from the taxpayer for their tax liability.
- Owe income tax of $10,000 or less ( excluding penalties & Interest)
- Have timely filed returns or pay any tax shown on such returns during any of the preceding five taxable years
- Cannot pay the tax immediately
- Agree to fully pay the tax liability within 3 years
- Agree to file and pay all tax all tax returns during the term of agreement
- The taxpayer has not entered into any installment payment program in last 5 years
Streamlined Installment Agreement
Following are some of the conditions where the IRS must approve Streamlined Installment Agreement for the taxpayer
- The total balance of unpaid assessments is $50,000 or less (Excluding accrued penalty & interest)
- The balance due is payable within 72 months
- Not in open bankruptcy proceedings
There is a set up fee for the Streamlined Installment Agreement payable by the taxpayer which applies towards your first payment. There is a seperate fee payable to IRS for reinstating or restructuring the installment agreement.Accounts in which may qualify for Streamlined Installment Agreement are Notice Status Accounts, Balance Due Accounts & Pre- Assessed Accounts.
Non Streamlined Installment Agreement
Non Streamlined Installment agreement is an option for the taxpayers owing $50,000 or more to the IRS. There are no qualifications for this type of agreement. Form 9465 ( Installment Agreement) alongwith Form 433B or Form 433F is submitted to the IRS. Form 433F – Collection Information Statement which includes taxpayer’s income, assets, expenses & debts.
Based on the information provided on Form 433F the IRS can either approve or reject the installment agreement option . False information is one of the reasons for the rejection of Form 433F.
Partial Pay Installment Agreement
Partial Pay Installment Agreement allows a taxpayer to make monthly installment payments to the IRS based on what the taxpayer can afford after taking into account your essential living expenses. Form 433F is submitted to the IRS for the determination of essential living expenses.Taxpayers should know that this option is not a final agreement which essentially means the IRS can review your financial condition every two years and can increase the monthly amount payable of partial pay agreement or terminate the agreement based off the outcome.
What are the payment options?
Some of the payment options available to the taxpayer are :
- Online Payment
- Direct Debit
- Payroll deduction
- Check or Money Order
- Electronic Federal Tax Payment System
Termination of an Installment Agreement
Following are the conditions which can lead to the termination of Installment Agreement by the IRS.
- Inaccurate Form 433 Information
- Missing a payment
- Increase in tax liability since the beginning of Installment Agreement
- Taxpayer did not file timely subsequent tax returns
How we can help
Dealing with tax issues can be stressful and it is advisable to hire a tax expert who can expertly guide you in the navigation of complex tax issues. Give us a call at Allay Tax to help you understand the best possible tax resolution option. We have the best resources for making your life debt free.
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Reach out to us for a free consultation. Our tax experts can help you determine the best service to get relief from your debt.
