Installment Agreements with IRS
The tax lawyer at the Columbus, Ohio-based law firm Porter Law Office, LLC has experience with securing installment agreements to pay off federal tax liabilities. If the Internal Revenue Service (“IRS”) is sending you billing notices, and you are unable to pay an outstanding federal tax liability, you should consider an installment agreement as a collection alternative.
In certain circumstances, the IRS may allow you to pay off your outstanding tax liabilities according to a monthly payment plan called an installment agreement. An installment agreement can be a beneficial collection alternative for both the taxpayer and government.
The experienced Columbus, Ohio tax attorney at Porter Law Office, LLC has in depth understanding of the procedural components to entering into an IRS installment agreement. This article provides some tips for why an IRS payment plan may be your best option.
The Basics of an Installment Agreement
An installment agreement is an arrangement by which the IRS allows you to pay your tax liabilities over time. I.R.M. 18.104.22.168. The IRS payment plan can be guaranteed if you have individual income tax liabilities of $10,000 or less. You also may qualify for a streamlined installment agreement if you owe up to $25,000 in income taxes and meet other requirements.
An installment agreement does not affect the IRS’s right to file a notice of federal tax lien, but the filing of the tax lien may sometimes be avoided. I.R.M. 22.214.171.124.2. Importantly, the IRS may not levy on your property while the installment agreement is pending or actually in effect. I.R.M. 126.96.36.199.
While negotiating an installment agreement, IRS employees must inform taxpayers of certain information, including that all tax returns must be filed and taxes must be paid to qualify for the IRS payment plan. See I.R.M. 188.8.131.52(8).
Practice Pointer: While all tax returns must be filed and tax payments made to qualify for an IRS payment plan, the IRS will analyze your current year’s tax liability. If it appears there will be a balance due, the employee is directed to include it in the installment agreement. Further, new liabilities can be added to the installment agreement in the future.
Entering into an IRS Installment Agreement
Unless you qualify for a guaranteed or streamlined installment agreement, the IRS will require you to furnish a financial statement detailing your assets and liabilities, bank accounts, employment information, and future income prospects. This financial information is provided to the IRS in a Collection Information Statement (“CIS”). The CIS contains detailed information about your income sources and assets. Thus, a taxpayer is always encouraged to pay the down the tax liability to qualify for a streamlined or guaranteed installment, neither of which require the submission of a CIS.
To determine how much you can pay per month, an experience tax lawyer should review your financial situation and overall tax liabilities. Contact the experienced tax attorney at Porter Law Office, LLC to discuss your financial situation in more detail.
Benefits of an IRS Installment Agreement
The installment agreement can be a win-win for you and the government. Under an IRS payment plan, the government gets paid in full, with interest. On the other hand, the installment agreements stops IRS collection efforts including the power of levy and seizure of property. Reg. 301.6331-4.
In fact, simply requesting an installment agreement suspends levy action. Further, if the tax liability being paid through the installment agreement is for a year in which the return was timely filed, the failure to pay penalty is reduced from .5% per month to .25%.
Contact an Experienced Ohio Tax Attorney
IRS Installment Agreement Representation | Columbus Tax Lawyer
Porter Law Office, LLC is a boutique law firm that assists taxpayers with resolving tax debts with the IRS and state of Ohio. Columbus, Ohio tax attorney Matthew R. Porter, Esq. LL.M. assists taxpayers with securing installment agreements with the IRS. An IRS payment plan is a valid collection alternative. If you have questions about whether your current tax liability and financial situation will qualify to enter into an installment agreement with the IRS, contact the experienced Columbus, Ohio tax lawyer at Porter Law Office, LLC today for a free case evaluation.
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Helpful IRS Installment Agreement Resources
- Online IRS Payment Plan Agreement
- IRS Payment Plan and Installment Agreement Information
- IRM, Part 5, Chapter 14, Section 1, Securing Installment Agreements
- IRM, Part 5, Chapter 14, Section 5, Streamlined, Guaranteed and In-Business Trust Fund Express Installment Agreements