If you do not have the ability to pay your balance in full, the IRS has a program where you can pay them back in installment and that is called an installment agreement.
Several different types of payment:
Traditional Installment Agreement
This standard agreement is a "full pay" installment agreement in which the taxpayer agrees to pay the balance off in full in a set amount of time, which is determined by the IRS.
Streamlined Installment Agreement
This applies when a taxpayer owes $25,000 or less in tax debt. The taxpayer must agree that they will pay off the entire tax debt balance in 72 months. Under the Streamline Agreement the taxpayer will not be required to prepare a financial disclosure with the IRS.
Fresh Start Installment Agreement
When a taxpayer owes more than $25,000, but $50,000 or less they can agree to pay off the debt in 72 months or less. In order to qualify for this, the taxpayer will need to agree to have the monthly payment direct debited from their bank account or deducted from their wages. The taxpayer will also have to prepare a financial disclosure.
Step-up Installment Agreement
A Step-Up Installment Agreement is perfect for someone who has expenses that are beyond what the IRS will accept, but the payments are almost done. If this is the case, the IRS will allow the taxpayer to make a smaller payments to start, which is typically 12 months and then the taxpayer will have to make larger payments down the road. In order to qualify for this the taxpayer has to agree to pay off the balance in full.
Partial Pay Installment Agreement (PPIA)
A PPIA is an agreement in which the taxpayer will not be required to make full payment of their tax liability. The taxpayer will be required to provide all financial documentation to the IRS. The IRS will accept a PPIA if they believe the taxpayer will only be able to pay a portion of their tax liability within the time set for the State of Limitations (the IRS has up to 10 years to collect tax debt after the date of assessment.) This is similar to an OIC agreement, except the taxpayer will be required to make payments until the expiration of the Statute of Limitations, but will result in the lien staying in place.
Contact us today so that we may fully assess your unique situation and determine which agreement would be of most benefit to you and your family.