IRS Installment Payment Plans
Also payment plan, an installment agreement is a negotiated arrangement that allows a taxpayer to pay off IRS tax debt over a specified period of time. The installment agreement is devised to help taxpayers reduce and ultimately eliminate their tax debts, through a pre-determined monthly amount paid in installments.
IRS payment plans are available for all kinds of taxes-including payroll and employment taxes. The monthly payments will be calculated based on the taxpayer’s liability and how much he/she can afford to pay each month. Once the Installment Agreement has been established, the taxpayer will receive a monthly statement showing payments, the amount still owed, and the monthly amount due. After the completion of the specified period (typically two years or more), the IRS will review a taxpayer’s financial situation and determine whether the monthly payments can be increased.
One of the major advantages of entering into a payment plan is that it brings the enforcement action to a stop, including the levy of bank accounts, wage garnishment, allowing some additional time to resolve the issues underlying the tax liabilities. The critical part is once the plan is instituted, default would cost in the form of collection activity being initiated without notice.
However, interest and penalties would continue to accrue until the outstanding balance is completely paid. In addition, a tax lien may be filed as part of the terms of the installment payment agreement, depending on the amount of the total liability.
Contact us for more information or call us in our Doral, FL office at Call 305-500-9361 today!