Types Of Installment Agreements
- June 21, 2019
- Posted by: asal
- Category: Tax Relief
Do you owe the IRS more than $10,000 in back taxes? If you owe back taxes and can’t afford to pay all at once, tax relief options exist. Platinum Tax Defenders can help you determine which tax relief option is right for you. One of the many tax resolution options the IRS offers is an Installment Agreement. Call Platinum Tax Defenders today to determine which tax resolution option for which you might qualify. Read on for the different types of Installment Agreements that exist to pay back taxes.
What is an Installment Agreement?
An Installment Agreement is a monthly payment plan to help taxpayers pay back taxes. Installment Agreements are often the easiest way to pay off a significant tax debt. To help taxpayers pay back taxes, the IRS offers several types of Installment Agreements. When requesting an Installment Agreement, it’s best to consult a tax resolution professional who is knowledgeable on the types of Installment Agreements. To request an Installment Agreement, taxpayers must submit Form 9465. If you want to add new tax debt to an existing Installment Agreement, you must contact the IRS directly.
Things to know before considering an Installment Agreement
Before you apply for an Installment Agreement, there are some things to know. Before applying for an Installment Agreement, you should:
- File all past tax returns even if you can’t pay your tax debt
- The IRS will only approve an Installment Agreement if you file all past tax returns
- Once you’ve entered into a payment plan, you must pay the monthly amounts on time. If you don’t pay back tax payments, your agreement may default.
Also, even though you’re in a payment plan, the IRS still charges interest. Therefore, if there are ways to pay back your tax debt in full, you’ll want to try. Depending on the size of your tax debt, you’ll want to compare the costs for your situation. Consulting a tax relief professional can help you determine if an Installment Agreement is the right tax relief plan for you.
What types of Installment Agreements exist?
There are several types of Installment Agreements the IRS offers to pay back taxes. Below is a list of the different types of Installment Agreement options. Before applying for an Installment Agreement, consult a tax relief professional. The experts at Platinum Tax Defenders have successfully saved their clients hundreds of thousands in tax debt since 2011.
Guaranteed Installment Agreements
If you owe $10,000 or less, the IRS will automatically agree to an Installment Plan. When entering an Installment Agreement, you must allow the IRS to take any refunds you may receive in the future. To determine your minimum monthly payment, the IRS will take your total balance and divide it by 36 months. You can pay more than the minimum to pay off your back taxes in less than 36 months. To qualify for a Guaranteed Installment Agreement, you must not have entered an installment agreement within the last five years.
What are the benefits of a Guaranteed Installment Agreement?
One of the main benefits of a Guaranteed Installment Agreement is that the IRS will not file a federal tax lien or levy against you. A tax lien gives the IRS rights to certain assets if you don’t pay back taxes. Tax levies provide the IRS with the power to seize certain assets.
Streamlined Installment Agreements
Depending on how much and what type of tax you owe, there are two types of Streamlined Installment Agreements. For both types, you must pay the tax debt in full within 72 months. The tax debts must also be satisfied within the time limit for the IRS to collect the tax. Below are the two types of Streamlined Installment Agreements:
- Assessed tax liability under $25,000
o This option is available for individuals, businesses that are still operating, and business that have gone out of business.
- Tax liability from $25,001 to $50,000
o This option is available to individuals and out-of-business sole proprietors.
To get this type of Installment Agreement, you must pay through direct debit or a payroll deduction agreement. You can apply for a Streamlined Installment Agreement online or by mail.
Partial Pay Agreements
For this agreement, you must have some ability to pay your taxes but not in full. The IRS may allow you to make payments until the collection period expires. Contact Platinum Tax Defenders to determine if this payment plan is right for you. If you are in a tight financial position, you might also want to consider an Offer in Compromise.
In-Business Trust Fund Express Agreement
For businesses that owe up to $25,000, they may be eligible for an In-Business Trust Fund Express agreement. Companies must pay the tax debt in full in 24 months or before the collection period expires. If a business owes more than $25,000, they can pay down the debt before applying.
Routine Installment Agreements
For those who don’t meet the criteria of the above options, they can request an Installment Agreement from the IRS. The IRS will likely ask you for supporting documents for your income, expenses, and other amounts you owe.
- Six Year Rule: if you owe individual income tax, you may qualify for the six-year rule. In this case, you must provide financial information but not proof of reasonable expenses. Also, you must stay current with all filing and tax payment requirements. You must fully pay the installment in 72 months and within the collection period.
- One Year Rule: This option is for taxpayers who you can’t pay their debt in full within six years. You may be given up to one year to modify or eliminate significant expenses. By changing your costs, you may be eligible to pay the liability within six years.
Want to know which Installment Agreement is Right for You? Call Platinum Tax Defenders today
The expert tax relief team at Platinum Tax Defenders has years of experience obtaining Installment Agreement plans for our clients. Don’t face your tax debt alone – let Platinum Tax Defenders help. We have successfully saved our clients hundreds of thousands in tax debt, and we can help you too. If you owe the IRS $10,000 or more, call us today. We’ll investigate your case to determine which Installment Agreement is best for you. Call Platinum Tax Defenders today for a free consultation.