IRS Payment Plans

So you have either agreed to the amount the IRS says that you owe, paid the bill and all is behind you, or you are assessed the tax over your protests and now your case is “in collection,” meaning that you are receiving nasty letters from the IRS to pay or face a levy of your bank account or garnishment of your wages. If this describes your situation, you must act quickly and timely to resolve your tax problem.

Tax collectors are called Revenue Officers, as opposed to Revenue Agents, who audit and determine the amount of taxes you may owe. The Revenue Officer has many tools to compel a taxpayer to pay the tax or face the wrath of these collection tools: liens, levies, wage garnishments, and seizure of assets.

What are your payment options?

• Full pay – either in one check or over several months (usually 3- 6 months). Selecting this option may preclude the filing of a tax lien or other draconian collection activity for so long as you abide by your agreement to make the monthly payments.
• Installment agreement – generally, the maximum window over which the IRS will accept payment is 60 months, but that payment period can extend to more months in given situations.
• Tiered installment agreements where a lower level of payments are arranged for a short period of time, followed by increased level of payments for the remainder of the time it takes to full pay.
• Offer-in-compromise in which the offer reflects a reasonable payment given the taxpayers’ financial situation. A disclosure of equity in assets is required.
• Uncollectible account status in which collection action is put on hold for 12 months.

Consider Putting Your Tax Debt on a Monthly Plan.

If you cannot pay all that you owe now and do not qualify for an offer in compromise, an IRS installment agreement may be your next best option. Consult McFARLANE LAW – A Tax Law Firm - for your full range of payment options. Payment Agreements allow you to pay IRS debt in full in smaller, more manageable amounts, usually in equal monthly payments. The amount of your installment payment will be based on the amount you owe and your ability to pay that amount within the time available to the IRS to collect tax debt from you.

At the law firm of McFARLANE LAW, located in Scottsdale, Arizona, we represent clients throughout Arizona and the United States in making payment arrangements with the IRS. Contact us to learn more about IRS payment plans.

Understanding IRS Installment Agreements

The IRS allows taxpayers who are unable to pay the full amount of taxes they owe on time to enter into payment plans — also known as installment agreements — under which they will pay their taxes over time in monthly installments.

Tax Note: Once you enter into an IRS payment plan, you will be charged interest — at generally high rates — on your taxes and may be hit with additional penalties if you are unable to keep up with your monthly installments. Even if you agree to a Payment Agreement, the IRS may still file a Notice of Federal Tax Lien to secure the government’s interest until you make a final payment. However, the IRS cannot levy against your property (1) while your request for a Payment Agreement is under consideration, (2) while your agreement is in effect, (3) for 30 days after your request for an agreement has been rejected, or (4) for any period while an appeal of the rejection is being evaluated by the IRS.

Depending on your income, assets and other unique circumstances, you may be able to make an offer in compromise in an effort to reduce your overall tax liability. The IRS will only accept an offer in compromise under certain circumstances, and for many people, the installment agreement will remain the best approach. Contact us so we can assess your finances and advise you on your options.

Exploring Payment Plans in Bankruptcy

Another way to put certain tax debts on a payment plan may be to file for bankruptcy. While most tax debts cannot be discharged in bankruptcy, the IRS may be willing to accept payment of tax debts as part of the bankruptcy payment plan with the bankruptcy trustee.

This approach will not work for everyone. Before taking the major step of filing for bankruptcy, you should consult with both a tax attorney and a bankruptcy attorney about your options. Contact us to schedule an appointment with one of our experienced tax lawyers.

Full Payment Services Provided to Our Clients

McFarlane Tax Law can also assist taxpayers to full pay their IRS tax debt. Many taxpayers struggle to obtain accurate and consistent information about their tax account with the IRS. We can obtain and provide the correct payoff amount from the IRS or ADOR for the taxpayer. Additionally, we provide a breakdown of the taxes, penalties, and interest for each of the specific years or periods owing. We provide clear and specific payoff instructions on how and where to send payment.