> Will The IRS Allow Monthly Payments ?

• You don't have to disburse the entire sum of money you owe the IRS at one time! Instead, you can set up a monthly payment plan. The IRS will provide you with an installment plan that has a suggested monthly amount; however, if that amount is too expensive for your budget, don't worry.

• According to the Taxpayer Bill of Rights, you are only obligated to pay what you reasonably can afford after ensuring regular living expenses are taken care of first.

IRS monthly payments

> What Is IRS Installment Agreement Program ?

• If you have an outstanding government tax liability, it is your responsibility to pay it off. If you don't pay your balance in full every month, you'll be charged interest as well as a late payment fee. To avoid these penalties, the IRS suggests that taxpayers pay their balances in full. Additionally, if you don't file a tax return on time, you will be charged a fee for not filing; so even if can't immediately pay the entire balance due, file as soon as possible.

• The IRS offers a monthly installment agreement for taxpayers who cannot pay their tax debt in full. Please note that by choosing the installment option, you will end up owing more taxes (including interest and penalties).

• Contrary to what one might think, the IRS suggests that taxpayers take out loans to pay their taxes in Topic 202 - Tax Payment Options. The reasoning behind this is that the interest rate charged on methods like credit cards or home equity loans is usually lower than if they were to not pay taxes and accrue penalties and interest charges.

>> Taxpayers can make payments to the IRS in different ways, which are described below:

  • Automatic deduction from a bank account
  • Your employer withholds money from your paycheck for taxes or other purposes.
  • You can pay by money order or check.
  • The Federal Tax Payment System (EFTPS) allows you to electronically pay your federal taxes.
  • With a credit card
  • Via Online Payment Agreement (OPA)

The standard fee for an installment agreement from the IRS is $105, but if you submit Form 13844: Application For Reduced User Fee for Installment Agreements, there's a possibility that the fee could be reduced.

> Different Types Of Installment Payment Plans

>> IRS Installment Agreement Partial Payment

• Even though it's ideal to fully pay your delinquent tax liability immediately, the IRS is aware that this might not be possible for some. If you cannot pay off the entire amount owed by the Collection Statute Expiration Date but think you could make partial payments over time, The IRS may be able to arrange a Partial Payment Installment Agreement (PPIA) with you if they are made aware of your situation.

• The PPIA (public policy income adjustment) cannot be given until the equity in the taxpayer’s assets is reviewed to decide if it can pay for the tax liability. Taxpayers are not required to use their assets' equity to pay liabilities, but if there is a lot of equity present, then the Internal Revenue Service may seize and/or levy taxes on the asset according to its policies stated in detail within the Internal Revenue Manual.

>> Regular IRS Installment Agreement (More than $50,000)

• If taxpayers owe the government more than $50,000, they must follow a different set of rules by the Automated Collection System (ACS). The ACS is a three-tiered CICS application. CICS stands for Customer Information Control System - a computerized inventory system that helps keep track of taxpayer information specifically related to cases where there is money owed or someone has not filed their taxes.

• If you're a taxpayer, you must complete Form 433-F, Collection Information Statement. although the IRS suggests making voluntary payments, doing so does not guarantee that they will not explore other avenues to collect payment.

>> Automatic Monthly Payment Plan with the IRS

• Although it can be difficult to come up with the money to pay your taxes all at once, the IRS provides an online payment plan that allows you to make monthly payments over time. You have three options for making these payments: direct debit from your checking or savings account, paying by check or money order through the mail and using a credit card. If you would prefer not to meet with someone in person, you can also self-certify through an online application.

> Unable To Make A Payment This Month? Here's What Could Happen.

• The IRS will look at your monthly income and expenses to decide what you can pay. This is called the Collection of Financial Standards. If your monthly income is more than your reasonable expenses, then the IRS thinks you can pay the extra amount each month. But if your monthly expenses are more than what you earn every month, then the IRS should agree that you have a hardship and label you as Currently Not Collectible status.

• If the IRS is asking for more money than you can afford, tell them that you need to investigate your income and expenses first. Assure them that you will call back after taking a look. Next, examine Form 433f and the Collection Financial Standards. The IRS provides information regarding what they will accept as reasonable for expenses in the Collection Financial Standards. Also, there is a specified amount that everyone can claim without having to provide receipts or additional proof (e.g., an individual can claim $723 per month; a household of two can claim $1,292).

> How To Negotiate Monthly Payments With The IRS ?

According to the IRS, if you owe them more than $50,000 or will be unable to pay off your debt in six years, you need to fill out a Collection Information Statement. This form allows collectors to determine how much you can pay monthly. Please note that payment amounts are ultimately decided by the IRS and not the collector, so different IA forms may be requested.

>> By following these tips, you can negotiate an installment plan successfully:

  • You need to fill out Form 433-A and submit it to the collector before proposing a payment plan. This will help ensure that your monthly payments are affordable.
  • To start, offer to pay an amount that subtracts the cost of your basic needs from your income. This is the monthly cash you have left over after paying for life's necessities. Even so, don't make a false promise to get your plan approved; it would be very wrong to give the IRS more than you can provide. If an IA is accepted, renegotiation becomes much harder for both parties involved.
  • The IRS may not have accepted your Installment Agreement yet, however, make your very first monthly payment once you propose the agreement. Voluntary payments show that you're willing to cooperate and follow through with terms and help build a foundation for trust. For example, if you opt to pay $200 per month for three months until your IA is accepted, the collector is more likely to agree that this is a reasonable amount."

> How The IRS Can Revoke Your Installment Agreement

>> Unless one of the following is accurate, both you and the IRS are obliged to adhere to the terms of your IA agreement :

  • If you don't file your taxes or pay the outstanding amount, the IRS computers won't review your finances yet. However, they will begin tracking you to see if you follow through with future tax returns and payments.
  • If you're late or do not make a payment, it will hurt your credit score. If you are behind in any payments or remit payment late under an IA, the agreement may be null and void immediately. The IRS typically provided a window of 30 to 60 days before taking such action; however, this is usually only for the first missed payment. Should revocation occur, know that generally, you have the right to reinstate the original terms of the agreement.
  • Generally speaking, your financial status will improve or decline quite noticeably. The IRS probably won't find out about this though, unless you tell them. They may review your case every year or two and ask that you submit a new Form 433-A to maintain your IA.
  • The IRS will discover if you gave false or incomplete information during the negotiation process. Oftentimes, people forget to mention certain valuable assets.

> Do You Need a Professional to Help You Negotiate With the IRS ?

People often seek professional help when they need to communicate with the IRS because navigating the system can be complicated, and costly mistakes are easy to make without experience. A professional will increase your chance of getting a favorable outcome.

If you're looking for expert help to deal with the IRS, Ideal Tax is a great organization to consider. Their team of professionals has experience dealing with the IRS and will work to get the best possible outcome for their clients.