Tag: IRS Installment Agreements

What type of IRS Installment Agreements will the IRS accept from you?

Continue reading below.

Click One of These Other IRS Topics to Learn More

Tax Evasion
IRS Statute of Limitations


But what are IRS Installment Agreements?

If you can’t afford to pay your full tax liability the IRS may let you break it up into payments to help you avoid a wage garnishment, or bank levy,  because of your unfiled taxes or other IRS problem.

They call that an installment agreement.

There are three types of tax payment plan agreements. I’ll share what those are real quick so you can get on with the videos you came here to watch.

What is the Fresh Start Initiative?

The type of IRS Installment Agreements most want to hear about is the Fresh Start Initiative.

It’s actually called a Streamlined Installment Agreement and is different from an Offer in Compromise.

The way it works is if you owe $50k or less to the IRS and can pay that amount within 72 months, the IRS may break it up for you. You’ll just need to get it paid off within six years.

This Type of Installment Agreement is What I Call a Classic Installment Agreement

If you owe more than $50k or have ever defaulted on installment agreements this will be what you get stuck with.

The IRS will look at your financial situation using a form 433F or a form 433A and a 433B.

tax payment plan

If you have a business or are self-employed, the IRS determines allowable expense standards. Which means how much you can afford to pay on your installment agreement payment. The figures usually are not pretty. That’s because their allowable expense categories are ridiculous.

Someone could end up in a situation where they owe $100k to the government. They make $10,000 a month. The IRS wants them to pay $7k a month towards the liability.

Hit with a similar situation like that yourself you might have a tough time making those payments.

The Third Type of IRS Installment Agreements is the Partial Pay Installment Agreement

It involves something called the Collection Statute of Limitations. You have a 10-year statute of limitations in which to pay back your tax obligations to the government.

If you file a tax return and you have a liability that you owe the IRS, the IRS only gets 10 years to collect that money.

Now, there are things that can stop that time. There’s actually things that can add more time to the 10 years. But, generally speaking, you have 10 years to pay that back.

But if you owe $70k and you have three years left to pay. It’s not likely that you will be able to pay that $70k back in that time.

The IRS used to coerce taxpayers into signing extensions to the statute for five extra years. Those days are long gone, though.

So, back to my scenario. You owe $70k you only have three years left on the collection statute.

What are you going to do?

Well, the IRS is going to look at your information and then determine how much you can afford to pay.

So, let’s say that in our scenario you can afford to pay $300 a month, and there are 36 months left on the statute.

That means you would pay $300 times 36, $10,800 over that three years instead of the $70k.

So that’s a pretty good deal, right?

tax payment plan

If you would like my help as an IRS tax attorney in calculating the collection statute call my office at (813) 229-7100.

Now there’s one catch and one kicker in a partial pay installment agreement…

…and that is you actually cannot have any assets in excess of your monthly disposable income.

So if you have equity in a house, equity in a car, things like that.  The IRS WILL NOT put you into a partial pay installment agreement.

Instead, they will look for your equity in those assets.

So those are the three installment agreement types.

Enjoy the videos!

How to Set Up a Payment Plan with the IRS

Three Types of IRS Installment Agreement

Classic IRS Installment Agreement – IRS Payment Plan

The IRS Partial Pay Installment Agreement

IRS Streamline Installment Agreement

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