Setting up an installment agreement with the IRS allows you to pay off your back taxes over time while remaining in good standing with the taxing authority. This is a good option for people that want to get rid of their tax debt but don’t have enough money to pay it off all at once because it breaks the amount down into affordable monthly increments.
Many taxpayers like installment agreements because the IRS may reduce certain penalties once the agreement has been established. Please read on to learn more about how this arrangement works and if it’s a possible payment plan for you.
How an IRS Installment Agreement Works
Similar to other payment plans offered by the IRS, any delinquent tax returns must be filed before applying for an installment agreement. When you’re ready to apply, Madison Fund Service, Ltd. will file IRS Form 9465 on your behalf to request an installment agreement. The IRS charges a fee to set up the agreement and even if they grant it, you’ll continue to be charged interest as you pay off your tax debt.
Installment Agreement Payment Plans
Certain plans only require a small monthly payment until the statue of limitations is reached and then the rest of debt is cleared. Other kinds of plans may demand a full repayment and require a larger monthly payment but, even in these cases, the increments are designed to be reasonable so the goal of paying off the debt can be achieved. The designated amount of the monthly payment will be determined by weighing the overall tax bill against what the taxpayer has the ability to pay. These installments must be consistently paid on time to avoid defaulting on the agreement.
What Type of Installment Agreement is Right for You?
The IRS offers different types of installment agreements and some have specific requirements you must meet in order to successfully set up the payment plan. An installment agreement is often fairly easy to obtain when the amount of taxes you owe doesn’t exceed $25,000 and you have a qualified tax professional like Madison Fund Services, Ltd. helping you file the necessary documentation. Even if you owe a larger amount, our firm will work with the IRS to find the best solution to settle your tax debt. Call us at 718-829-0134 now or request a consultation through our website.
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