If you are facing a large IRS tax debt, you may feel overwhelmed. Not many people have a hefty lump sum of money sitting around to pay the IRS. Fortunately, you have many options that provide relief.There are numerous tax relief alternatives that fit particular situations. However, IRS Installment Agreements seem to work for the majority of circumstances. Learn facts about which agreement can help you and make the right decision.
The Two Basic Types of Installment AgreementsIRS Installment Agreements provide you with time to manage your tax debt, protection from aggressive IRS action, and affordability. There are two basic types of IRS Installment Agreements; those that require financial disclosure and those that don't.
Financial Disclosure Agreement
- A form 433-A will show what monthly payment you can afford by disclosing your finances.
- If the form is filled out incorrectly, you may wind up paying more than you can afford.
- This agreement lasts until the debt is paid off or the debt expires.
- The IRS may place a lien on high debts in an agreement to secure them.
- If your income increases, so will your monthly payments.
- You must owe less than $25,000 or pay down your debt to that amount.
- Your finances are not disclosed; protecting any assets you want kept private from the IRS.
- Your payments will be based on how much is needed to pay the full debt in 60 months.
- Non-Disclosure IRS Installment Agreements last no longer than 5 years.
- Your monthly payments will never increase, even if your income improves.
Both of these IRS Installment Agreements have some common rules. First, you must not miss or be late with any of your monthly payments. Second, you must file every tax return going forward. Third, if you owe for any future tax returns you must pay that debt in full. Future debts are not covered under IRS Installment Agreements already made. If you find you cannot afford to make your payments on time every month or you cannot pay future tax debts in full, you must make a new agreement with the IRS. Otherwise, you will default your agreement.
Defaulting IRS Installment Agreements immediately drops any protection you had from collection activities. The IRS will resort to tax levies right away. This is why it is so important that you do not enter IRS Installment Agreements that you cannot afford. A Tax Professional is recommended to assist with your choice in IRS Installment Agreements.
For more information on IRS Installment Agreements consult a professional. Call now or fill out the form below for a free tax debt consultation to learn more about IRS Installment Agreements! We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.