If like many Americans, you also owe back taxes and are not able to pay despite your best efforts, what should you do? The answer lies in many of the provisions offered by the IRS to help taxpayers who are unable to fulfill their tax liabilities. One such provision is IRS Tax Installment Agreement, a monthly payment plan to help you pay off your tax liability in easy monthly installments. Continuing on the subject, in this blog post, we answer five commonly asked questions about IRS Tax Installment Agreement. Read on.
1. What are the types of Installment Agreement?
There are four types of Installment Agreements:
- Guaranteed Installment Agreement: Apply for this three-year IA if you owe less than $10,000.
- Streamlined Installment Agreement: If you owe $50,000 or less, this may be the path for you and you can pay off your liability in 72 months or less.
- Non-streamlined Installment Agreement: If you owe more than $50,000 and need a five-year payment plan, this is the right option for you.
- Partial Pay Agreement: If your total tax debt is more than $10,000 and you are able to make a partial payment, this is the way out.
With the assistance of law experts at The Law Offices of Nemeth & Flores, you can assess the most suitable Installment Agreement option for you. Continuing on the subject, we answer the five most common FAQs related to IRS Tax Installment Agreements.
2. Can the IRS levy a property while an Installment Agreement is in place?
The answer is no. The IRS does not levy your property, bank account, or wages if you are in an Installment Agreement.
3. What happens if I miss an IRS Installment Agreement payment?
In case you fail to make payment of your Installment Agreement, you will get Notice CP 523 from IRS mentioning that IRS plans to terminate your agreement and levy your property. This notice may adversely affect your credit score and may cause other financial issues. The best option is to inform the IRS by calling them directly.
4. What are the accepted methods to pay the installments?
Your Installment Agreements for paying federal tax debts can be settled using the following payment modes:
- Credit cards
- Money orders or cheques
- Direct bank account transfer
- Debit from your work paycheck
- Electronic Federal Tax Payment System (EFTPS)
5. Can the IRS put a tax lien on me if I am in an Installment Agreement?
Yes, the IRS can put a tax lien on your assets while you are in an Installment Agreement to secure themselves against other creditors who take an interest in your property. The total outstanding balance is the deciding factor.
6. Why would the IRS cancel my existing Installment Agreement?
The IRS can do so in the following scenarios:
- You missed a payment.
- You did not file for subsequent returns.
- Your total tax liability increased since you started your Installment Agreement.
- Your Collection Information Statement (Form 433A or 433F) was incomplete or incorrect.
Need to Request an IRS Tax Installment Agreement? Contact Us!
Every taxpayer is required to meet their tax obligations at all costs. If you are unsure how to proceed or have reached a dead end with an IRS tax related problem, discuss your case with an IRS tax lawyer at The Law Offices of Nemeth & Flores, who can analyze your financial situation and help you go ahead with the Installment Agreement that best fits the dynamics at play. For a no-obligation consultation, fill out our contact form or simply call (972) 426-2553.
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