There are several different options to back back taxes.
If you do not qualify for a tax hardship and a offer in compromise is out of the question, the IRS provides different types of payment agreement to take care of your IRS tax debt.
Payment Plans available to taxpayers
A. Streamlined Installment Agreements
A streamlined installment agreements may be approved for taxpayers under the following circumstances:
The aggregate unpaid balance of assessments is $25,000 or less.
The unpaid balance of the assessments includes tax, assessed penalty and interest, and all other assessments on the tax modules. It does not include accrued penalty and interest.
If pre-assessed taxes are included, the pre-assessed liability plus unpaid balance of assessments must be $25,000 or less.
The aggregate unpaid balance of your tax assessment will be fully paid in 60 months, or the agreement will be fully paid prior to the expiration of the statute of limitation, whichever comes first.
Delinquent accounts in any status that qualify are the following:
1.Accounts that in billing or tax notice status,
2. Balance due status accounts anywhere in the billing cycle,
3. Accounts with balances in which the IRS has not assessed yet. These include account balances if you just filed a tax return with the IRs that has not been processed on the IRS computer system. These are called pre-assessed accounts.
The following types of taxpayers qualify for streamlined agreements:
1. Individual Taxpayers with 1040’s,
2. Business (income tax only),
3. Out of business BMF any type tax.
Federal Tax Lien Determinations
A federal tax lien determination is not required for a streamlined installment agreement but may be made at the discretion of the revenue officer and liens may and can be filed.
A IRS revenue officer has the latitude to make a timely tax lien determination as a non-filing or deferral of the lien filing, then finish the negotiation and close the case to a streamlined IA.
No managerial approval is required.
These agreements may be secured in person, in the field, by telephone or by correspondence.
As with all agreements, the taxpayer must have filed all tax returns that are due prior to entering into the agreement.
IRS will usually encourage taxpayers to:
Encourage taxpayers to pay assessed amounts greater than $25,000 to:
1. avoid the need for securing financial statements; and,
2. qualify for streamlined agreements.
Penalties and Interest
Penalties and interest continue to accrue throughout the duration of an installment agreement.
B. Guaranteed Installment Agreements
Internal Revenue Code (IRC) section 6159(c) requires the IRS to accept proposals of installment agreements under certain circumstances. In accordance with IRC 6159(c) the Service must accept proposals to pay in installments if taxpayers are individuals who:
1. Owe income tax only of $10,000 or less excluding penalties and interest,
2. Have not failed to file any income tax returns or to pay any tax shown on such returns during any of the preceding five taxable years,
3. Cannot pay the tax immediately,
4. Agree to fully pay the tax liability within 3 years,
5. Agree to file and pay all tax returns during the term of the agreement and,
6. Have not entered into an installment agreement during any of the preceding five taxable years.
As a matter of policy, the IRS grants guaranteed agreements even if taxpayers are able to fully pay their accounts.
Unlike the criteria for streamlined agreements, the dollar limit for guaranteed agreements of $10,000 only applies to tax.
The taxpayer may owe additional amounts in penalty and interest both assessed and accrued and qualify for a guaranteed agreement, so long as the tax liability alone is not greater than $10,000.
Guaranteed installment agreements may be granted by IRS Revenue Officers and other contact personal and employees.
Managerial approval is not required for these type of agreements.
A Federal Tax Lien determination is not required for a guaranteed installment agreement but may be made at the discretion of the revenue officer and liens may be filed.
Once again, the IRS revenue officer has the latitude to make a timely lien determination as a non-filing or deferral of the lien filing, then finish the negotiation and close the case to a guaranteed Installment Agreement.
If taxpayers do not qualify for guaranteed agreements, the IRS will consider streamlined agreements prior to considering other alternatives.
Penalty and interest continue to accrue during these and all other installment agreements, though they are guaranteed by law.
C. In-Business Trust Fund Express Installment Agreements
In-Business Trust Fund Express installment agreements may be granted if:
1.The entire liability including accruals $25,000 or less when the case is received in inventory,
2.The taxpayer may not reduce a liability that exceeds $25,000 in order to qualify,
3. Taxes are fully paid in 24 months, or before the the expiring of the statue whichever is earlier.
If accounts qualify for IBTF Express agreements:
1. Collection Field function employees ( Revenue Officer ) must make a field call to view assets and request full payment prior to granting an IBTF Express agreement.It is important to note that;
a. No financial statement is required,
b. The Revenue Officer will collect information and input bank and receivables information to CADE 2 computer in case the taxpayer defaults. This will be there levy source for future use.
A federal lien determination is required by Collection Field function employees but liens may be filed if they will protect the government’s interest, such as if a property sale is imminent.
Trust Fund Recovery
No trust fund recovery penalty determination is required however the revenue officer must ensure that the Assessment Statute Expiration Date is protected.
Independent Review Request
If for any reason rejection of installment agreements is planned, the taxpayer has the options to request and to refer for Independent Administrative Review.
If the IRS give you a hard time with this request you can point to See IRM 18.104.22.168).
Call us today and learn more how you can get a IRS Payment or Installment Agreement with the IRS.