Professional Services

Installment Payment Agreement

What Is An Installment Payment Agreement

An installment payment agreement with the IRS (or state tax agency for state tax debts) allows taxpayers that cannot fully pay their tax liability and do not qualify for an offer in compromise to pay the full amount owed through monthly installment payments. Unlike an offer in compromise, the IRS continues to charge interest on the unpaid portion of the debt even as you are making payments under the installment agreement.

During the term of the agreement the IRS will retain all tax refunds. Accordingly taxpayers should be sure that their tax withholding or estimated tax payments are not more than their tax liability for any tax year while the agreement is in effect.

The amount you will have to pay is a function of three factors:

  • The amount of the tax owed
  • Your ability to pay the tax
  • The amount of time the IRS has under tax law to collect the tax (statute of limitations on collection)

Keys to a Successful Installment Agreement

  • Demonstrating to the IRS that you cannot fully pay the tax liability because your equity in assets and your income after "allowable" expenses are less than the liability.
  • Completing the financial disclosure forms correctly, thoroughly, and with knowledge of what is required to report as income and deduct as expenses, and providing the appropriate documentation.
  • Getting into full compliance with all filing requirements and tax withholding. For example, past due returns must be filed and tax withholding or estimated taxes (for the self-employed) must currently be in compliance.

Why Professional Representation is Useful

The issue for taxpayers is that there is a competing interest between the IRS and the taxpayer. The IRS wants to collect the entire amount of the debt as quickly as possible when the taxpayer wants a payment agreement that is manageable and affordable for their financial situation. Many taxpayers end up with monthly payments greater than they can reasonable afford and this often leads to default of the agreement. An experienced tax professional offers the following:

  • Experience and tax knowledge. Negotiating an installment agreement that the taxpayer is financially able to comply with is often very challenging and requires substantial knowledge regarding tax law and IRS guidelines and regulations.
  • Prepare the financial disclosure documents to present the most favorable financial picture for the client.
  • Be the contact person so you never have to speak to or negotiate with the IRS.
  • Negotiate an installment agreement that is affordable in light of client's unique financial situation.

Services We Offer To Individuals, Self -Employed and Business Clients

  • Analyze carefully client's situation to ensure that an installment agreement is the appropriate settlement for our client.
  • Prepare all the required forms and ensure that all proper documentation is submitted.
  • Help client achieve compliance by preparing unfiled tax returns and that proper taxes are currently paid.
  • Negotiate with the IRS to achieve best possible outcome.
  • Prevent any collections action on the part of the IRS while we pursue the offer (no levy or other collection action).
  • Appeal any adverse decision.

Call us to have us negotiate the lowest possible installment payment agreement.

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