Owing money can feel overwhelming, especially when the entity you owe money to is the government. Luckily, government agencies understand that people have expenses and may need a little help paying their past due taxes, offering various solutions in the form of payment plans.
Do not evade the IRS
One of the most important things clients must know is that even though you are probably feeling overwhelmed, especially when you receive letters from the IRS, there is a solution that allows you to pay your taxes. Do not ignore these letters. The IRS is trying to help you and will do so if you allow them to.
Installment agreements
An installment agreement allows you to pay a portion of your past due taxes in monthly payments instead of paying it as a lump sum. The IRS in particular offers several installment agreements to suit the needs of the community.
Short-term payment plans
If you are looking to pay off your past due taxes in the short term, you might consider this plan. It requires that you pay the balance within 120 days and there is no fee associated with enrollment. However, interest and penalties will continue to accrue until you pay the debt in full.
Long-term payment plans
If you need more than 120 days to pay off your tax debt, you can make use of the IRS’s long-term installment payment program.
This option allows you to divide the payments over a period of up to six years. In this plan, there is a fee associated with enrollment, but that could depend on how you make the payments (automatically vs. non-automatically)
Qualifications for installment agreements
To qualify for either of these programs, you must have filed all tax returns, owe less than $50,000, and if you owe more than $50,000, you might still be eligible but the authorities may request additional documentation from you.
Applying for an installment agreement is easier than you think. However, having legal guidance can ensure you file the right forms, at the right time, say the right thing and give you peace of mind.