Despite your best-laid plans, something went amiss. Now, you owe the Internal Revenue Service (IRS) a significant amount of money.
What do you do in this situation? Do you make a partial payment and see what happens? Do you ask for an offer in compromise? Do you ask to be put in “currently not collectible status? Or is an installment agreement the way to go?
Are you eligible for an installment agreement?
Before you can decide if this is the right way to go, you need to determine if you’re eligible for an installment plan. Generally speaking, you need to have all your tax returns filed. If you are fully compliant, then there are some options that may be available. The option that is right for you will depend on your ability to pay and the amount owed to the IRS.
The advantage of an IRS installment agreement is that it typically allows payment of the tax debt by manageable monthly payment. As long as you make your payments on time, the IRS will pause its levy actions, and that can ultimately protect your personal property and income – including your home, bank accounts and current wages. The disadvantage is that interest and penalties continue to accrue, and in some cases, the IRS may demand a higher installment than you want to pay.
IRS installment agreements can be useful for a lot of people, but they’re not a one-size-fits-all financial panacea to your tax problems. Every situation is unique, and installment agreements are not the right route for everybody. Experienced legal guidance can help you figure out your options, settle your tax debt and end the anxiety associated with owing the IRS money.