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Questions about Installment Agreements

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IRS Installment Agreements

 

You can make monthly payments through an installment agreement if you’re not financially able to pay your tax debt immediately.

However, you will reduce or eliminate the amount of penalties and interest you pay and avoid the fee associated with setting up an installment agreement if you pay your tax bill in full.

 

The IRS Installment Agreement for In-Business Trust Fund Express Installment Agreements

 

Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA).

These installment agreements generally do not require a financial statement or financial verification as part of the application process.

 

The criteria to qualify for an IBTF-Express IA are:

  •  You owe $25,000 or less at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
  •   The debt must be full paid within 24-months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier.
  •   You must enroll in a Direct Debit installment agreement (DDIA) if the amount you owe is between $10,000 and $25,000.
  •   You must be compliant with all filing and payment requirements.

 

 

Streamlined Installment Agreements

The Fresh Start provisions also mean that more taxpayers will have the ability to use streamlined installment agreements to catch up on back taxes.

Under the Fresh Start initiative, the maximum dollar criteria for streamlined installment agreements has been raised from $25,000 to $50,000 and the maximum term has been raised from 60 months to 72 months.

These installment agreements generally do not require a financial statement, but a limited amount of financial information may be required in the application process.

The Streamlined Installment Agreement criteria is divided into two categories, balance due of $25,000 or less, and balance due $25,001 to $50,000.

The criteria to qualify for streamlined installment agreements with a balance due of $25,00 or less are:

 

  •  You owe $25,000 or less, at the time the agreement is established. If you owe more than $25,000, you may pay down the liability before entering into the agreement in order to qualify.
  •  The debt must be full paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
  •  You must be compliant with all filing and payment requirements.
  •  Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
  •  Defunct businesses, including any type of entity and any type tax (Form 940, 941, 943, etc.).
  •  Operating businesses are limited to income tax liabilities only (Form 1120).

 

 

The criteria to qualify for streamlined installment agreements with a balance due of $25,001 to $50,000 are:

 

 

  •  You owe $25,001 to $50,000, at the time the agreement is established. If you owe more than $50,000, you may pay down the liability before entering into the agreement in order to qualify.
  •  The debt must be full paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
  •  You must be compliant with all filing and payment requirements.
  •  Individuals who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.).
  •  Businesses are limited to defunct sole proprietors who owe any type of tax (Form 940, 941, 943, etc.).
  •  You must enroll in a Direct Debit Installment Agreement.
  •  A limited amount of financial information may be required during the application process.

 

Taxpayers seeking installment agreements exceeding $50,000 will still need to supply the IRS with a Collection Information Statement (Form 433-A (PDF) or Form 433-F (PDF)).

 

 

How long does it take Fresh Start Tax to get a Streamline Payment Agreement?

 

We can get a Streamline Payment Agreement within a one hour period of time. The only thing that slows us down is the IRS computer.

 

Can I get an Installment Agreement if I have not filed my last year’s return?

 

No. IRS will make you file all tax returns. They will not give you an Installment Agreement until all returns are current.

 

What happens if I have an agreement but can no longer make my payment because some life circumstance has happened?

Not a problem, simply call us at Fresh Start Tax and we will get your payment agreement modified to fit your new condition. This happens all the time and we do this on a regular basis. With this economy, this is happening more and more.

 

How long is my agreement in the IRS computer system for?

Your agreement is locked in the computer system for a varied, case by case period of time. IRS puts a closing code based on the agent’s experience or based on a your adjusted gross income filed on each year’s return as they get processed.

 

You will not know how the IRS is closing the case unless they tell you. Always ask when they plan to kick out the agreement. Generally, as a rule thumb, the agreements stay in the system for at least three years, but each case is treated differently.

 

How many types of Installment Agreements does the IRS offer?

The IRS offers two types of installment agreements, streamlined and long term.

 

Does the IRS take Installment Agreements on an Offer in Compromise?

Yes they do, there are three types of Offers in Compromise. They allow for payments to be made on all of them. Depending on your situation, the faster you pay off the offer, the lower your settlement will be.

 

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Does an accepted Offer in Compromise mean my Tax Lien will be removed?

No, it will not be removed until it is paid in full and all the terms of the offer are met.

 

Does an Internal Revenue Service Installment Agreement hurt my credit?

The Internal Revenue Service Installment Agreement is only known by you and the IRS. Only if a Federal Tax Lien is filed will your credit be hurt.

 

Does Internal Revenue Service charge a fee for an Installment Agreement?

Yes, the IRS does charges a fee for an Installment Agreement. It is usually built into the tax payment itself. A separate check is not required.

 

Is a partial payment required for an IRS Installment Agreement?

No. The IRS simply builds it into the total tax due.

 

What is a Form 9465 Streamline Installment Agreement?

This is an Installment Agreement for people who owe under $25,000 in back taxes. You must have all your tax returns filed to qualify for this. Under the Streamline Installment Agreement you are not required to file a financial statement.

 

Does the Taxpayer Advocate’s Office get involved in these cases if IRS will not accept the Installment Agreement?

Yes they do. However you must meet the necessary standards test, have a hardship and the request must be reasonable. The Taxpayer Advocate agrees with the agent most of the time. That is why you need a professional to handle the case.

 

My tax debt is something I will never be able to pay, what should I do?

The Offer in Compromise program is well suited for this very reason. Call us, lets get started.

 

Can I pay my Installment Agreement off with a payroll deduction?

Yes, and the IRS prefers that you do. The IRS will be assured they get their money on time. They always prefer the employer to make the payments. Sometimes, they will insist on it.

 

Will the IRS file a Notice of Federal Tax Lien with an Installment Agreement?

IRS usually files a Federal Tax Lien on every case that there is a balance due. There are times when they can withhold the filing of the Federal Tax Lien. A professional should be consulted on these cases.

 

Can I get an IRS Installment Agreement on unpaid business payroll taxes?

Yes. IRS takes Installment Agreements on payroll tax/form 941 cases. You must be current on all payroll tax deposits and all payroll tax returns. IRS will not set up an agreement if this is not done.

 

Does a Partial Payment Installment Agreement stop IRS enforcement action?

In almost all cases a Partial Payment Installment Agreement stops all enforcement action. IRS usually will not levy during this period of time.

 

Does the IRS take installment plans on all types of taxes?

Yes it does. IRS will set up an installment plan on any type of tax.

 

Does the IRS use their own form for an Installment Agreement?

Yes. The IRS has their own internal form to activate the Installment Agreement.

 

Does the federal tax installment plan happen with all government agencies?

Each agency has their own set of rules which governs them. You must contact a specialist in each area of the federal law.

 

Are quarterly estimated tax payments still due if I am on a payment agreement?

The IRS expects all taxes to be paid and filed on a timely basis and that includes the estimate tax payment. If you miss any filings or payments it could void your payment plan.

 

Can I do the form 9465 myself?

You probably can if you are current in all your tax filings.

 

If I am on a fixed retirement income such as Social Security, can the IRS still levy me?

IRS can levy almost anything that moves. The answer is yes. The IRS can even levy disability income. The IRS must be contacted and your case resolved or they will levy most forms of income.

 

Can I have a direct deposit payment plan for the IRS?

Yes, the direct deposit payment plan for the IRS is one of the best ways to keep your payments current with the IRS. There are forms that can be provided to make this happen. Ask your Fresh Start Tax Representative.

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Does an IRS Installment Plan release my Federal Tax Lien?

No once a Federal Tax Lien has been filed by the IRS only a full payment to the IRS or an accepted Offer in Compromise will release the Federal Tax Lien.

 

Is the IRS Partial Payment Installment Agreement going to close my case?

Yes, the Partial Payment Installment Agreement is a method of case closure for the IRS. These type of cases will put your case into the IRS closed status because of an active Installment Agreement.

 

Can I get immediate tax relief with an Installment Agreement?

Yes, IRS will no longer send levies or take any enforcement action once an Installment Agreement is in place.

 

Will an Installment Agreement release my wage garnishment?

Yes, the installment agreement will release your Wage Garnishment or Bank Levy immediately.

 

I need my Wage Garnishment stopped immediately, how can I do that?

Contact Fresh Start Tax, once we have your information we work with IRS to stop the wage garnishment. In many cases this can be done immediately.

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