What Is An Installment Agreement?
As part of the IRS Fresh Start Initiative, an Installment Agreement is a resolution option available to taxpayers. This agreement is established between the IRS and the taxpayer, who has demonstrated an inability to settle their entire tax obligation upfront.
Essentially functioning as a payment plan, an Installment Agreement enables the taxpayer to make regular monthly payments towards their outstanding tax debt until it’s fully repaid.
Is an Installment Agreement Suitable for Your Situation?
If your tax debt is manageable and can be paid off within six years with monthly payments, an Installment Agreement might be suitable for you.
As long as you maintain timely payments, the IRS will refrain from aggressive collection tactics like levies and liens. Additionally, you’ll no longer accrue failure-to-pay penalties or receive collection letters, showcasing your commitment to resolving the debt.
However, it’s important to note that interest will continue to accumulate on your total debt, resulting in paying more than the original amount over time.
What are the Qualifications for an Installment Agreement?
To be eligible for an Installment Agreement, you need to ensure compliance with the IRS.
The IRS assesses your compliance based on your current tax filing status. Failure to file tax returns renders you non-compliant with the IRS, making you ineligible for an Installment Agreement or any other IRS Fresh Start Initiative relief program. Once compliant, submit IRS Form 9465 for an Installment Agreement.a
Can I Qualify On My Own?
Certainly, you can be eligible for an Installment Agreement without professional representation. However, depending on your balance and financial circumstances, seeking professional assistance may be beneficial.
Installment Agreements are frequently the most straightforward resolutions as they establish a fixed monthly payment to the IRS. The IRS determines this payment plan by assessing the taxpayer’s financial information.
Several factors influence this calculation, including the maximum allowable expenses for your area. It’s important to note that these maximum allowable expenses may differ from your actual expenses, leading taxpayers to acknowledge financial constraints they cannot sustain long-term.
Are There Risks When Applying For An Installment Agreement On My Own?
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