The Basics of Installment Agreements

After people have filed for their annual tax return, they become aware that they owe the IRS a substantial amount of money. What makes matters worse for them is recognizing that they don't have adequate funds to cover all these tax debts. Good thing that this kind of IRS issue is made much more manageable because of the presence of a number of options for the taxpayers. Setting up an installment plan is among these options.

In setting up the installment plan, the IRS allows you to determine your monthly due and which date it is has to be settled. In fact, your chances of getting an approval for this increases when your tax bill doesn't ecedd $10,000, have been a conscientious taxpayer, and have proven that you do not have that much money available. The only major consideration is that the provisions in your installment plan should sufficiently pay for all your tax dues in three years. To apply for one, you must fill out Form 9465 (Installment Agreement Request Form) and attach this in your tax return.

The IRS may offer the option to make partial payments of tax liability in instances when the taxpayer is really financially incapacitated. Those who avail of this option are obliged to give specific financial details regarding their equity assets. Since the IRS will verify these data, it is essential that the pieces of information provided are accurate. Also, the IRS will recheck every two years if the taxpayer is now in better financial standing. If so, then there is a probability that the monthly payment will be increased or the arrangement will be terminated, altogether. Although slightly different, this type of understanding is an installment plan nonetheless.

Whether or not you decide or are unable to pay your tax bill in one complete payment or you choose to use any of the installment agreement options available, the fact is, you will be paying more money to the IRS the longer you stretch your payment agreement. In essence, you are buying time from the IRS if you use these installment options. There are also penalties associated with any installment agreement. You will be charged with a one-time penalty of $105 by the IRS unless you set up a direct debit for each monthly payment from your bank account. If you choose the latter, the fee goes down to $52. The fee even goes as low as $43 if you qualify for the requisites of being in the lower income tax bracket.

While setting up installment plans appears to be a very attractive option, other taxpayers see it in a different perspective. For them, it is better to apply for an Offer in Compromise, or OIC, because even if it requires them to give out a lump-sum amount, this is considerably lesser than the original tax due. Keep in mind, however, that if IRS problems reach to the point where there is already a need to make use of the options mentioned above, it is now time to seek professional help regarding this matter.

Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He teaches attorneys, CPAs and Enrolled Agents in the finer aspects of IRS representation all around the United States. He can be reached at his website at http://www.getIRShelp.com

About The Author Darrin T. Mish (http://www.getirshelp.com) is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He teaches attorneys, CPAs and Enrolled Agents in the finer aspects of IRS representation all around the United States. He can be reached at his website at http://www.getIRShelp.com