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Pay Tax With an IRS Payment Plan

Pay Tax Debt With a Payment PlanIt is always frustrating when you do not have the ability to pay tax debt that you owe the IRS. Unfortunately, many taxpayers in America who owe money to Uncle Sam's collection agency can't pay tax debt in full. However, the IRS allows taxpayers to enter into a payment plan if they can't pay tax debt, but there are a few things you should know before you choose this option as a way to resolve your back taxes.

Can't Pay Tax Debt? Get a Streamline Payment Agreement

A Streamline Payment Agreement or a payment plan with the IRS can provide assistance if you unable to pay tax debt, but there is a catch. In fact, there are several catches including payment amounts and interest and penalty fees. Before you enter into any payment agreement with the IRS you should speak with an IRS debt professional.

Payment Amounts

The IRS determines how much your monthly payments will be when you are unable to pay tax debt in full. You will have to disclose all of your financial information to the IRS, called Full Financial Disclosure. The IRS will sort through every detail of your tax returns, bank statements, monthly income, and expenses to decide what the maximum payment amount you can afford is.

The IRS doesn't consider credit card payments, utilities such as internet and cable, subscriptions or memberships as "allowable expenses." For people who cannot afford to pay tax debt, these expenses are considered luxuries by the IRS, and they won't take them into account when calculating your debt to income ratio, which is how they discover how much you can pay on your back taxes monthly. If you want to dispute the IRS on the "allowable expenses" you will have to prove the expense is necessary and does not impede on your ability to pay tax debt.

Interest & Penalties

The interest and penalties on your debt continue to accrue while you are in a payment plan. The IRS will add a monthly interest percentage to your debt, to the tune of 25% in a given year. Depending on the debt owed, and the amount of your payments, you may not feel as if you tax debt is decreasing. Furthermore, the IRS reserves the right to adjust your payment amount if your income increases.

What to Do When You Can't Pay Tax Debt

The IRS wants you to default on your taxes payment plan. Why? Because once you default, the IRS swoops in like vultures and begin collection actions to take everything they can, and since you told the IRS all of your financial information, they know what can be seized.

Though a payment plan is the only affordable solution for thousands of people who can't pay tax debt by any other means, it is imperative you find a tax professional that can negotiate a fair payment plan where you will be able to see progress.

Call now or fill out the form below for a free consultation if you can't pay tax debt that you owe the IRS. We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.

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