One common myth is that the IRS will never negotiate with someone who owes money. In reality, the IRS offers official channels for debt negotiation as part of its Fresh Start program. Are you unsure about how to negotiate your debt with the IRS because you’re unfamiliar with relief options? Let’s discuss three popular options that make it possible to negotiate your tax debt without incurring new penalties.

Can You Negotiate Your Tax Debt With the IRS?

Yes, you have several options for negotiating a tax debt. There’s no guarantee that the IRS will approve your request for debt relief. However, there’s a good chance that you’ll qualify for an option that at least creates a manageable way to pay what you owe. Here are three options that should be on your radar if you owe money:

• Offer in Compromise (OIC).
  
• Installment Agreements (IA).
  
• Penalty Abatement.

It’s important that you have a grasp on your current financial status before you pursue one of these options. The IRS will examine your finances closely to gauge your ability to pay what you owe. Additionally, you must be current with all tax returns before the IRS will even consider negotiating with you. Don’t be discouraged if you haven’t filed all previous tax returns. The IRS simply wants you to get up to date as quickly as possible. Yes, you should file even if you cannot pay what you owe.

Offer in Compromise

An Offer in Compromise (OIC) allows you to settle your owed taxes for less than what you owe. The IRS is looking for you to prove that you cannot reasonably pay your full tax liability before it reaches its expiration date. Most tax liabilities reach a statue after 10 years (120 months). As a result, the IRS will often reduce your debt as a way to at least get something from you. Here’s the full list of what the IRS takes into consideration when reviewing your application:

• Your income.
  
• Your expenses.
  
• Your asset equity.
  
• Your ability to pay.

You will submit an OIC offer to the IRS based on what you can reasonably afford to pay. The IRS weighs your monthly income against your reasonable collection potential to determine how much it will excuse from your tax liability. In addition, all liens will be removed once your offer is approved.

The IRS will expect a “lump” payment when you submit your offer. This payment can either reflect 20 percent of your offer amount or one standard monthly payment. It’s important to know that your OIC will only remain valid if you stay current with payments and file all future tax returns on time. The IRS will return any filed Offer in Compromise (OIC) application that does not contain all of the necessary information and estimated payments. However, the IRS will keep and apply any initial payment to reduce your balance. It’s very important to get help from a tax professional to ensure that your application is submitted properly to avoid rejection or delays. This is especially true when you consider that liens can be applied up until your application is approved.

Installment Agreements

The IRS may approve you for an installment agreement. This is actually the most common form of debt relief available. To qualify, you must prove that you don’t have the available cash, borrowing power, or equity to pay back what you owe to the IRS. The IRS will ask you to fill out forms detailing your income, debt, assets, and liabilities. You shouldn’t expect the IRS to offer much wiggle room if your finances reflect an ability to pay back the IRS debt that you owe.

Entering into an installment agreement with the IRS typically means that you’re agreeing to pay back what you owe over a period spanning six years. The big perk of an installment agreement is that you’re able to pay off your debt in manageable monthly installments without incurring penalties and fees. You’re also avoiding liens or wage garnishments that could hurt your credit score and financial reputation.

It’s important that you commit to making all payments on time once you’ve been approved for an installment agreement. Unfortunately, missing a payment means that you’ve violated the terms of your agreement. Violating agreement terms gives the IRS the right to move forward with seizing property and attaching liens.

Penalty Abatement

Do you feel that penalties have been harshly or unfairly assigned to your IRS bill? You may be in a position to petition for something called penalty abatement. Penalty abatement does not address any original tax debt or accumulated interest. It does address penalties that have been tacked on to your existing debt and interest. You have a few different ways to go about requesting penalty abatement. One option is a First-Time Penalty Abatement (FTA). This abatement applies if you have accrued penalties for failing to file your return on time, pay on time, or deposit taxes when due. Here’s what it takes to qualify:

• You didn’t previously have to file a return.
  
• You have no penalties for three tax years prior to the penalty year.
  
• You filed all currently required returns or an extension.
  
• You have paid or arranged to pay due taxes.

Another option is Reasonable Cause Penalty Relief. Did you fail to file or pay taxes because of a life event or natural disaster? The IRS will consider any sound reason presented for your failure to file a tax return, make a deposit, or pay due taxes. Here’s a rundown of causes that often qualify:

• Fire, casualty, or natural disaster.
  
• Inability to obtain records.
  
• Death, serious illness, or unavoidable absence of the taxpayer or immediate family member.
   
• Any reason that establishes that you used all ordinary care and prudence to meet your tax obligations to the best of your ability.

A lack of funds doesn’t count as a reasonable cause for failing to pay owed taxes. However, the criteria may be met if a lack of funds was caused by any of the factors listed above. Be prepared to back up all claims regarding a reasonable cause with documentation. The IRS will likely conduct an investigation to confirm your claim if you try to obtain Reasonable Cause Penalty Relief.

Find the Right Option for How to Negotiate Tax Debt With IRS Agents

Yes, the IRS will probably be willing to negotiate with you if you’ve failed to file or pay taxes for some reason. It’s so important to get ahead of the problem if you owe the IRS money. Tax Group Center is here to help you begin communication with the IRS for getting your tax debt reduced or sliced into payments. Our team can also pursue penalty abatement to help you avoid paying steep sums to the IRS. Our team of tax professionals, lawyers, and CPAs will help you discover and pursue the best option for your case. Additionally, we’ll help you stay on track with preparing your taxes on time and keeping up with payments to avoid the nullification of your relief plan. Give us a call today if you need a plan for settling a debt with the IRS. We help people negotiate tax debt with the IRS every day using the IRS’s own language.

People have lots of questions about the COVID-19 stimulus checks that are coming for Americans. You may be wondering if and when you will be receiving such a check. Let’s break down the basics.

What Is the Coronavirus Stimulus Package?

The United States passed a stimulus plan totaling $2 trillion on March 27. The goal of the stimulus package is to send direct payments to American taxpayers to help them get through the unprecedented COVID-19 situation. The lump sum you receive will be determined by the income claimed on your 2019 tax return – or your 2018 tax return, if you have not yet filed for the year. 

Who Qualifies for the COVID-19 Stimulus Checks?

First, you must be a United States citizen or resident alien in order to receive a check. Additionally, you will only qualify for a check if you filed a tax return for either 2018 or 2019. A Form SSA-1099, Social Security Benefit Statement, Form RRB-1099, or Social Security Equivalent Benefit Statement will also qualify you. You also must not be claimed as a dependent on another person’s tax return if you are over the age of 16.

How Much Will You Get From the Government?

The amount you receive in your COVID-19 stimulus check will be determined by your adjusted gross income for either 2019 or 2018. Even minors will be receiving checks. Here’s a breakdown of the key things to know:

• “Single” filers with adjusted gross incomes up to $75,000 are eligible for $1,200.
  
• For single filers, the payment amount drops by $5 for every $100 in income above $75,000.
  
• “Married filing jointly” filers are eligible to receive up to $2,400 if they have adjusted gross incomes below $150,000.
  
• Married couples will receive payments on a sliding scale up to $198,000.
  
• Married couples will receive $500 for each dependent under the age of 16 claimed on their tax returns.
  
• Anyone who files as “head of household” is eligible for a $1,200 check and $500 for each child claimed on a return if adjusted gross income is $112,500 or less.
  
• “Head of household” filers can also receive checks on a sliding scale if they earn up to $136,500 annually.

The caps are $2,400 for married couples and $1,200 for single filers. Those caps do not include the $500 per dependent under the age of 16 included in the stimulus plan. 

Do you qualify for a COVID-19 stimulus check if you receive a Social Security check? Yes, you qualify for a payment as long as you do not exceed the income limits mentioned above. Let’s move on to discuss how your check will be coming to you.

How Will You Receive Your Stimulus Check?

COVID-19 stimulus money will either be mailed or deposited directly into your bank account. If you receive a physical check, you can cash or deposit it the same way that you would any other type of check. The IRS will use the information in your 2018 or 2019 return to decide how your money should be sent to you. 

We also have word that the Department of Treasury is in the process of setting up a portal for people to use for accessing their payments electronically if they did not use direct deposits for their 2018 or 2019 tax returns.

Some Additional Things to Know About COVID-19 Stimulus Checks

Keep in mind that the IRS will first look for your 2019 return, so if you haven’t filed it yet, it may be important to do so. Your 2018 return will only be used if you haven’t yet filed for this year. Unfortunately, you may not be able to access a $500 payment for a dependent if you welcomed a new child unless you’ve filed for 2019. 

COVID-19 Stimulus Check FAQs

Do Self-Employed People Qualify for COVID-19 Stimulus Checks?

Yes, all self-employed people who don’t exceed the income threshold qualify for checks.

Will United States Citizens Living Abroad Receive Checks?

Yes, the IRS will use the Social Security numbers of qualifying people living abroad to issue checks.

Will the IRS Garnish My COVID-19 Stimulus Check If My Wages Are Currently Being Garnished Due to Debt?

No, the IRS will not touch your COVID-19 check.

Do I Have to Pay Taxes on My COVID-19 Check?

No, the money you receive from your COVID-19 check is not taxable. It’s possible that you could be required to pay back a portion of the payment you receive if your 2020 income is substantially higher than the income the IRS used to determine your eligibility. This is something to revisit when getting your taxes filed in 2021.

Contact Tax Group Center Today

If you have questions or want to file your 2019 tax return, get in touch with us. Tax Group Center can help you to get your taxes filed ASAP if you’re in this predicament. Filing your 2019 taxes before checks are issued will also give you an opportunity to make sure the IRS has the current information regarding your direct deposit. Our team of tax professionals is standing by to help!

Tax season 2020 won’t be like any tax season that’s come before – and as a result, there are some essential things to know about filing your tax return during the COVID-19 pandemic. The big thing to discuss is the tax deadline pushback: What does it mean for you?

What Does the Tax Deadline Pushback Mean for Taxpayers?

Here’s some key information: The deadlines to file and pay federal income taxes are extended to July 15, 2020. We’ve compiled some things you should know if you decide to use the July 15 deadline instead of the traditional April 15 deadline:

• Taxpayers who choose to push back their payments until July 15 will not be penalized.
  
• Taxpayers who choose to push back their payments until July 15 will not be charged interest.
  
• You do not need to file an extension to file past April 15 this year.
  
• Extending your filing date will also extend your refund date.

There is also a new deadline for contributing to your IRA that accompanies the change. You have until July 15 to make a 2019 contribution. 

You may be wondering if the decision to extend the federal tax deadline will impact your state taxes. Yes, many states are extending their filing deadlines for 2020. However, no change has been made across the board in regards to state deadlines. You’ll need to find out what officials in your specific state have decided.

What If You Can’t File by the New Deadline?

The usual late-payment penalties and interest will apply if you fail to make a tax payment by July 15 of this year. You can, however, file for an extension if you’re concerned that you won’t be able to make July’s deadline. This will push your new filing date to October. 

Being granted an extension doesn’t mean you have more time to pay what you owe – you’ll still need to make your tax payments by July 15 of 2020 even if you haven’t finished filing. This is the same policy that is in place every year.

Why Should Taxpayers Still File as Soon as Possible?

The decision to push back the filing deadline for 2020 will help many Americans during what is an unnerving and confusing time. The extended deadline has been implemented to ensure that Americans are not penalized for failing to meet a tax deadline that will land right in the middle of the COVID-19 situation. 

Of course, the fact that the COVID-19 tax deadline pushback has been put in place doesn’t necessarily mean that it’s your best option.

The reality is that it’s probably not advisable to wait to file your taxes beyond the standard deadline of April 15 if you don’t anticipate owing a lot of money. Most individuals and businesses will find that simply filing by April 15 will allow them to maintain better organization when doing financial planning for the rest of 2020.

The big reason to file as soon as possible is that you’ll receive your refund much sooner. The funds that you receive from your tax return could be extremely useful going forward – waiting until July 15 to file means that you’re deciding to postpone receiving your tax refund by months.

There’s a simple way to do the math to figure out if waiting to file until the new July 15 deadline would be beneficial for you. Start by taking a look at last year’s refund total. Is it greater than what you think you’ll owe at tax time this year? It’s wise to go ahead and file now if what you’ll get back is greater than what you’ll pay. Someone who made roughly the same income in 2019 as they did in 2018 will almost certainly be better off just filing by April 15.

Get All Your Questions Regarding the COVID-19 Tax Deadline Pushback Answered

It’s likely that you have questions regarding how the new COVID-19 deadline will impact your personal or business taxes specifically. The team at Tax Group Center is staying on top of the latest changes to ensure that our clients can file correctly by the correct deadline. We provide tax preparation services for both individuals and businesses, and we can even help you file electronically to get the quickest turnaround time for your refund possible. What’s more, our tax relief resources are available if you’re concerned that you may not be able to make payments on time this year. It may even be possible to set up a payment plan. Don’t hesitate to reach out today if you need help with your 2020 taxes!

A tax problem doesn’t have to haunt you forever. The IRS actually provides many options that taxpayers can use to settle tax debt, but it’s important to know what’s in front of you before you can decide how to move forward. Here’s how to find the right tax relief option for your tax situation.

How Do You Qualify for Tax Relief?

The fact that you’re a taxpayer qualifies you for one of the IRS’s tax relief programs, but you’ll need to look into the specific programs available to determine which one fits your needs. People who are unable to pay or file taxes due to circumstances like illnesses and natural disasters can qualify for relief. In addition, the IRS extends relief options to people who are struggling to pay tax bills. 

You’ll need to request the specific type of tax relief solution that applies in your situation. When you apply, the IRS will consider your ability to pay, your income, your expenses, and your assets.

How Do Tax Relief Services Work?

Relief doesn’t necessarily mean that your debt will be wiped away, but the IRS can be quite reasonable when it comes to making sure you can manage tax debt. The IRS will assess your ability to pay what you owe based on the financial information that you submit. There is a chance that the IRS will settle your debt for much less than you actually owe. In addition, your requirement to pay back your debt may be suspended if you can prove hardship. The IRS may also provide you with a payment plan that allows you to pay back what you owe using smaller payments over a period of about six years.

What Are Tax Relief Solutions That You Can Look Into?

The IRS offers a range of tax relief options. You’ll need to look into each option to decide which one applies to your situation. Here’s the list of options that may be available for you:

• Offer in Compromise (OIC)
  
• Penalty Abatement
  
• Installment Agreement (IA)
  
• Currently Non Collectible (CNC)
  
• Innocent Spouse Relief
  
• Audit Appeal

• Fresh Start Initiative 

Bear in mind that the IRS will not consider you for any of its relief options if you’re not current with your tax returns. 

The good news is that the IRS simply wants you to file any returns that you owe, and the fact that you filed returns late won’t impact your ability to qualify for available tax relief solutions. Of course, it’s highly recommended that you get those late returns filed promptly to avoid more tax issues going forward.

How Do You Determine Which Tax Relief Solution Is Right for You?

Most people aren’t very familiar with the IRS’s relief options. That’s why it’s highly recommended that you seek help from tax experts while deciding which program is right for you. Working with a tax team that deals with the IRS regularly will ensure that you take the right steps and avoid more penalties. One of the most important things a tax professional can do for you is take measures to get interest and penalties taken away. This includes very harsh penalties like tax levies, tax liens, and wage garnishments.

Most taxpayers who owe money qualify for Installment Agreements because the qualifications are pretty basic. You’ll just need to be willing to turn over financial information to the IRS that proves that you don’t have the cash or borrowing power to pay off your debt right now. You may be able to apply for a more robust relief option like Offer in Compromise or Currently Non Collectible if you can prove that making payments on your full debt total would create financial hardship.

Tax Group Center Can Help You Explore Your Relief Options

Tax Group Center helps our clients get access to tax relief solutions that can turn their entire lives around. Let us walk you through the options that are available to you; we’ll make sure you’re complying with the IRS’s requirements to make the process go as smoothly as possible. We’ll also help you get set up to make sure your repayment process is completed correctly. We have a team of licensed tax professionals, CPAs, and lawyers waiting to dedicate time and attention to your case. Call today!

Do you owe the IRS money? You may be worried that there’s no escaping harsh penalties and interest charges. But relief could be available. The IRS Fresh Start initiative offers several relief options for qualifying taxpayers; there are also options outside of this program that will reduce or erase your debt. 

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What Is Tax Relief and How Does It Work?

In short, tax relief is the IRS’s willingness to work with you to get a debt settled or erased. You’ll need to apply to specific programs to qualify. Remember, you need to be fully current with your tax returns before you can qualify for relief.

What Are All of the Federal Tax Forgiveness Programs?

You have several options for settling an IRS debt. Some of them fall under the IRS Fresh Start initiative, while others do not. Here’s a look at each one:

• Installment Agreements (IA) allow you to make monthly payments for debts totaling less than $50,000 for six years. Additionally, taxpayers can apply for several types of installment agreements based on debt owed and repayment periods.
  
• Offer In Compromise (OIC) is a settlement agreement that allows you to pay significantly less than what you owe to the IRS.
  
• Currently Not Collectible (CNC) status could apply if you cannot afford to pay your tax debt. This temporary hardship status is available if you can prove that paying back your tax debt will leave you without the money necessary to cover basic living expenses each month.
  
• Innocent Spouse Relief status may help you to escape tax mistakes or fraud conducted by a spouse without your knowledge. While not technically part of the IRS forgiveness program, this option can be used to clear your name and avoid tax debt.
  
• A bankruptcy discharge could apply if you intend to file for bankruptcy.
  
• Statute of Limitations Expiration is a little-known loophole that could actually allow your debt to expire without full repayment.

Keep in mind that the IRS requires specific documentation and proof from taxpayers who apply for these options.

What Is the Process for Getting Tax Relief?

You’ll need to do three things before you’re ready to apply for a forgiveness program:

• Compile all tax documents
  
• File all tax returns
  
• Decide which program applies to you

The IRS offers the Fresh Start initiative program for people who owe unpaid taxes. If you’re dealing with unpaid tax debt, learning about this program could be the first step to getting on the right track with the IRS – but the IRS is very particular regarding how it handles applications for this multifaceted program. 

One big misconception is that acceptance into the IRS’s Fresh Start program means that your debt is going to be instantly wiped clean from the slate. This is not typically the case. The Fresh Start initiative should be viewed as a cluster of options for repayment that allow you to avoid IRS penalties. Under this initiative, you’ll be cooperating with the IRS to get your debt settled.

How Do You Know How Much You Owe?

Figuring out exactly where you stand with the IRS is the first step to working out a settlement or repayment option. You may be dealing with muddled records and confusion if you’re trapped in a cycle of late tax payments. It can be especially difficult to understand what you owe if you haven’t stayed current with filing your tax returns. IRS fees and penalties can also make it difficult to know exactly where your current debt tally stands.

The IRS allows taxpayers to inquire about current tax debt online, by phone, or by mail. You’ll need to provide the IRS with specific information regarding your identity, address, and accounts when inquiring about your current debt balance. If you’re feeling overwhelmed regarding the process for making an inquiry, you can work with a tax professional who has done this many times before to ensure that everything is handled properly.

What Are IRS Collection Actions to Look Out For?

Unfortunately, it’s impossible to “protect” your money and assets from the IRS; it can go around you to collect funds directly from your employer or bank. 

There are many ways that the IRS can try to collect on unpaid taxes, including:  

• Tax liens, which establishes the government’s right to claim your property or any profits from its sale. 
• Tax levies, which can seize your property directly.
• Wage garnishment, which can take a portion of your wages directly out of your paycheck. 

How Does the Fresh Start Initiative Program Work?

The Fresh Start program is a channel for debt forgiveness, not a one-size-fits-all option. You’ll need to explore the specific opportunities that may apply in your case. That said, anyone who owes a tax debt of $50,000 or less to the IRS will almost certainly be qualified to initiate repayment under the Fresh Start initiative. Here’s a look at what’s addressed under a payment plan:

• The full debt amount
  
• Interest
  
• Penalties
  
• Tax liens
  
• Seizure of assets
  
• Wage garnishments

The comprehensive nature of the program is beneficial to anyone who would struggle to pay back a tax debt under the weight of mounting penalties, fees, and asset losses. If you pursue the Fresh Start initiative program, take a look at these three options:

An Extended Installment Agreement (IA) is a “fast-track” repayment option for anyone owing $50,000 or less to the IRS. You’ll have six years to pay off what’s owed without incurring any new interest or penalty fees if you’re approved. You also won’t have to worry about tax liens, asset seizures, wage garnishments, and related penalties as long as you stay current with your payments during the repayment window.

An Offer in Compromise (OIC) is a less common option, but it may be applicable to you if you’re able to make a convincing case to the IRS. An OIC will allow you to make an offer to settle your debt for less than you owe. The amount you are responsible for could end up being significantly less than the full value of your tax debt.

A Tax Lien Withdrawal is something to consider if the IRS has already moved forward with a lien. It is possible to have an IRS lien removed if you act before seizure activity begins. You will be required to agree to pay off your entire tax debt to the IRS using a direct repayment option. You will be permitted to formally request to have an IRS tax lien withdrawn from your account once you have set up a direct debt payment with the IRS. The big benefit of pursuing this option is that you may be able to have a lien removed before it is reported to the three major credit reporting agencies. 

How Do You Know if You Qualify for the Fresh Start Initiative?

Determining whether you qualify for this program comes down to looking at your circumstances and your options. Most people with tax debts totaling $50,000 or less will likely qualify for an installment payment plan at the very least. You could qualify for a debt reduction if you can prove that paying back what you owe would make it impossible for you to meet basic life needs. It’s time to talk it out with a tax professional if you owe the IRS money.

One thing that’s guaranteed is that you will not qualify for the IRS’s Fresh Start initiative if you have any unfiled tax returns floating around. Your first priority needs to be getting current with all late tax returns. The good news is that the IRS won’t hold those returns against you once you get them filed. Make sure you’re working with a tax professional to ensure that you’re meeting all obligations and enrolling successfully in a payment plan that will serve your needs.

How Do You Apply for the Fresh Start Initiative Program?

You’re going to want to get serious about applying for the Fresh Start program as quickly as possible to ensure that you don’t incur any new fees or miss your opportunity to keep tax issues off your credit record. 

First, make sure you’re current with all returns. Remember that being accepted into the Fresh Start program also means that you’re agreeing to file all future tax returns on time. Once your filings are current, it’s time to assess your circumstances to see which relief or payment option you’re going to qualify for with the IRS. The IRS will require you to complete something called an IRS Form 9465 to apply for the IRS Fresh Start initiative. You may also use the IRS’s website to enroll. 

Of course, the enrollment process is by no means simple. Make sure you have a tax professional guiding you every step of the way to help you get the best outcome possible!

The Tax Group Center Can Help You Navigate the IRS Fresh Start Program

The team at the Tax Group Center helps people successfully enter the IRS Fresh Start initiative program every day. We understand the complexities of the application process because we’re tax professionals who deal with the IRS around the clock. Our experienced team of CPAs, lawyers, and tax professionals will help you to find a solution within the IRS’s generous program that works for your needs. Reach out today to put tax problems in the rearview mirror.

Taxpayers sometimes find themselves in the position of owing money to the IRS. This is understandably a very stressful situation, and the stress is compounded if you don’t currently have the cash on hand to pay the IRS in full by the due date. Unfortunately, penalties and consequences can mount pretty if you do not take swift action.

One of the worst mistakes a taxpayer can make is to simply ignore requests for owed taxes. The IRS isn’t going away. It can use wage garnishments, tax liens, and bank levies to collect. In addition, penalties and interest can make it more difficult for you to afford your tax debt as the months go on. You need to know about your options for paying off what you owe without getting caught up in a stream of mounting IRS penalties. 

If you don’t believe you are capable of satisfying your tax debt, a potential option to explore is an IRS Installment Agreement (IA).

What Are the Benefits of Paying Taxes on Time?

Many taxpayers are able to successfully set up Installment Agreements with the IRS when they owe taxes – but you should never look at this as your first option. An installment plan should be thought of as a resolution option if you cannot pay what you owe today. 

Staying current with all tax obligations can spare you from the stress and time it takes to deal with the IRS once you owe money. Unfortunately, failing to pay your taxes on time will most likely cause the IRS to file a notice of Federal Tax Lien or bring an IRS levy. Being on time with payments can help you do the following:

• Avoid accruing additional interest and penalties
  
• Avoid offset of your future refunds
  
• Avoid issues obtaining loans

We’re really talking about protecting your assets, interests, and financial future. Having your taxes prepared professionally is one of the best ways to ensure that you’re in good standing with the IRS. In addition, utilizing ongoing business support from tax professionals is the best way to make sure that your personal or business tax situation stays on the right track.

What Is a Payment Plan?

If you’ve ever paid off a debt over time, you’re probably already familiar with how a payment plan works. An IRS payment plan is an agreement you make with the IRS that allows you to pay the full amount of taxes you owe within a specific timeframe. Payment plans are available for taxes owed by individuals and businesses. 

Keep in mind that the IRS really means a “short-term” payment plan when it talks about a payment plan. This means that you agree to pay the amount you owe within 120 days or less. The benefit of qualifying for a short-term payment plan with the IRS is that you will not be on the hook for a user fee. The IRS allows you to make payments through a short-term payment plan using a checking account, savings account, or the Electronic Federal Tax Payment System (EFTPS). You can also pay by check, money order, or credit card.

A payment plan is referred to as an Installment Agreement by the IRS when the payment period is longer than 120 days. Taxpayers make monthly payments through this type of agreement. The big difference between a short-term and long-term payment plan is that you will be responsible for user fees with a long-term plan. However, the IRS may waive your fee if you can prove low income. The payment options for long-term plans are roughly the same as the payment options for short-term plans.

How Do You Establish an IRS Installment Agreement?

You will need to formally apply for a payment plan. You can’t assume the IRS will agree to a payment plan in every situation, but the good news is that many taxpayers have success when applying. You probably have some questions regarding the process of how to set up an IRS Installment Agreement, so let’s dig a little deeper.

It will be necessary to fill out an official Installment Agreement Request (Form 9465) with the IRS if you want to qualify to make payments. You may be able to apply online if you meet certain requirements. Take your time as you proceed; it’s important to look closely at all of the information the IRS has provided regarding what it claims you owe. There could be circumstances that would actually give you the ability to appeal the amount owed or settle the debt for less than what the IRS says you owe. It is highly recommended that you have a tax expert take a look at your returns and IRS correspondence to unlock all of your options.

How can you know if you qualify for a short-term or long-term IRS payment plan? The maximum you can owe when applying for a short-term payment plan is $100,000 in combined tax, penalties, and interest. The maximum you can owe when applying for a long-term payment plan is $50,000 in combined tax, penalties, and interest.

Different Types of Installment Agreements

There’s a high likelihood that you’re going to qualify for something called a Guaranteed Tax Payment Agreement if you owe less than $10,000 to the IRS. This means that you’re possibly going to get instantly approved for an IRS payment plan as long as you meet the following criteria:

• You have not filed late taxes or paid taxes late at any point during the previous five years (not including extensions)
  
• All of your tax returns are filed
  
• You agree to file and pay on time in all future tax years
  
• You permit the IRS to take any future refunds you may receive

Another option is the Streamlined IRS Tax Installment Agreement. Look into this if you’re trying to work out a larger IRS debt – but bear in mind the option caps out at debts of $50,000. Here’s a look at the criteria that must be met:

• You have filed all of your past tax returns. You will need to file any outstanding returns before you can qualify for this type of agreement
  
• You have not entered into any installment agreements within the last five years
  
• You are not in the process of filing for bankruptcy
  
• You agree to pay setup fees

Taxpayers who are approved for a streamlined installment plan will have up to 72 months to pay off $50,000 or less to the IRS. The IRS added an updated streamlined option for people owing up to $100,000 in 2016. The extended option provides qualifying taxpayers with up to 84 months to pay off balances between $50,000 and $100,000.

People who owe larger amounts to the IRS can still qualify for installment agreements. It will be necessary to explore your options regarding Non-Streamlined IRS Tax Installment Agreements in this case. The big thing to know about taking this avenue is that you will be required to provide the IRS with a financial statement. The IRS will go over your current finances to decide if you are a good candidate for a non-streamlined option. 

The timeframe for this type of agreement depends on what the IRS determines is fair and appropriate based on your financial picture. There’s no getting around the fact that applying for a non-streamlined agreement can be complex. Make sure you have a tax expert working with you to increase the likelihood that you’ll get a workable offer from the IRS.

You may be at a point where paying off your tax debt using any type of conventional installment agreement simply isn’t an option. In that case, the IRS may agree to give you what is known as a Partial Payment IRS Tax Installment Agreement. You will enter into an agreement to pay a portion of your full tax liability to the IRS if you are approved for this type of plan. Be aware that the IRS will be assessing your case again in two years to see if your situation has improved. You should also be prepared for the IRS finding out whether you have any assets that can be sold to pay off your tax debt. 

A partial payment plan is a complex matter that should only be explored with the help of a tax expert who can anticipate and explain the IRS’s next move every step of the way.

What Are the Costs and Fees for an IRS Payment Plan?

It’s understandable if you’re concerned about adding any extra fees to what you already owe the IRS if you’re about to apply for a payment plan. Some taxpayers can essentially walk away without paying any extra fees, but others are required to pay fees before they can enter into IRS payment plans. What should you expect?

You won’t be responsible for any user fees if you qualify for a short-term payment plan. However, any accrued penalties and interest could apply until your balance is paid in full. You should also keep in mind that some fees could apply if you make your payments using a credit or debit card.

Fees do apply for a long-term payment plan. The setup fee when applying online for a direct-debit payment situation is $31. The fee climbs to $107 if you set up your account in person, by phone, or by mail. Setting up your long-term payment plan using a payment method other than direct debit online will cost $149. That same setup fee is $225 when setting up your account in person, by phone, or by mail. Your fee may be reduced if you qualify for a low-income waiver.

The IRS will charge you a fee if you need to revise your payment method in the future. The fee can range from $10 to $89. This is one of the reasons why you’ll want to make sure your payment plan is set up correctly the first time around. A tax professional with knowledge of IRS payment plans can help to make sure that happens.

Do You Have Questions About an IRS Installment Agreement?

You should investigate your eligibility for an IRS Installment Agreement if you owe money to the IRS. This option could make it possible for you to get back in the good graces of the IRS without any additional penalties. The team at the Tax Group Center can help you to determine the best payment option, apply directly to the IRS, and begin making payments that will prevent your debt from hurting your financial future. We can assist you with a payment plan for personal or business taxes. We understand how to apply for IRS payment plans using the language of the IRS. Reach out today if you need to find a way to pay off what you owe to the IRS!

Are you facing a tax penalty? One misconception is that nothing can be done about penalties once the IRS puts them in motion. The reality is that taxpayers have options to eliminate, reduce, or even freeze penalties. This is important because penalties can quickly bring about a “snowball” effect, turning a tax debt that you could reasonably pay off into a serious burden that can crush your finances. 

Is penalty relief on the table in your situation? Take a look at what you need to know about IRS penalty relief.

What Is Penalty Abatement?

Penalty abatement is when the IRS removes a penalty from the table if you can prove that you did not intentionally neglect your tax duty. The IRS has special rules in place that make it possible for first-time offenders and cooperative taxpayers to have penalties lifted somewhat easily. This is what’s called first-time penalty abatement (FTA). The IRS’s FTA program is open to people and businesses with clean compliance histories.

Do you qualify for IRS penalty abatement? You’ll need documentation, a willingness to work with the IRS, and an ability to understand its requirements. 

What Penalties Are Eligible for Relief?

The IRS is pretty consistent in granting penalty relief for “mild” tax offenses. Here’s the list of tax offenses that typically qualify for abatement:

• Failure to file your tax return
  
• Failure to pay your taxes by the due date
  
• Failure to deposit certain taxes

Just because the IRS often provides penalty relief somewhat generously in these cases doesn’t mean that you can’t get relief for other causes. However, the IRS typically looks at other tax issues on a case-by-case basis when seeing if penalty relief can apply. Let’s explore the types of penalty relief that could apply to you.

What Are the Types of Penalty Relief?

The categories of relief are pretty broadly defined by the IRS, which means you may be able to prove that you qualify for relief if you look closely enough at your situation. Let’s discuss the types of relief that may be applicable.

Administrative Waivers

An administrative waiver often applies in the case of a first-time penalty, but certain details will help you build a stronger case:

• You weren’t required to file a return for three years prior to the penalty year
  
• You had not incurred any penalties for three years before the penalty year
  
• You complied with all requirements for submitting forms or a filing extension
  
• You have already paid or made arrangements to pay overdue taxes
  
• You have received incorrect verbal information, instructions, or advice from the IRS

You may be in the clear if you qualify for first-time penalty abatement. However, relief isn’t going to apply automatically unless you prove your status to the IRS. Working with tax professionals to take care of the situation as soon as possible can help you walk away from penalties quickly.

Statutory Exceptions

The IRS will grant statutory exceptions for specific circumstances that account for why you were unable to satisfy a tax obligation. A statutory exception could be in play if you received incorrect advice or instructions from the IRS in writing. The IRS may also grant a statutory exception if the tax amount involved is less than $1,000. Other causes for exception include being newly retired, newly disabled, or in a combat zone. 

Does your situation qualify? You won’t know unless you ask the IRS. That means you’ll need to go over the details of your case with a tax professional to discover the best way to proceed. You’ll also need to provide extensive documentation proving why you qualify to have penalties canceled.

Reasonable Cause

Reasonable cause relief is granted by the IRS when taxpayers can prove that they failed to satisfy their tax responsibilities due to circumstances that were beyond their control. You must prove that you exercised care and prudence when doing all within your power to take care of your tax duty. Here’s a look at some of the common occurrences that qualify under reasonable cause:

• Fire, natural disaster, or some type of catastrophic event
  
• An inability to access your records
  
• Death, severe illness, or incapacitation
  
• Some other extraordinary circumstance or hardship

Forgetting to take care of a tax obligation will not qualify as a reasonable cause, and a lack of funds does not automatically qualify you for relief. However, an exception could be made if the lack of funds is related to one of the qualifying circumstances. 

Building a case that showcases all of the facts that support your claim is essential when applying for penalty relief based on reasonable cause. In addition to proving that a situation occurred, you’ll need to be able to prove how circumstances specifically prevented you from satisfying your tax duty. You may also be asked to prove that you took action quickly to try to fix the situation. Be prepared to supply hospital bills, insurance records, and other forms of documented proof.

How Do You Know Which Penalty Relief Option Is Best for You?

One of the qualifying causes for penalty relief listed above may be screaming out at you because it fits your situation exactly. Conversely, you may feel discouraged because you don’t see how you could qualify based on the criteria above. It is a mistake to believe that the situation is as cut and dried as it looks in either case. For instance, you may not realize that the IRS provided you with incorrect information until someone who understands tax codes and laws takes a look at your documents. That could take you from someone who doesn’t qualify to someone who does in an instant. There are many more details and stipulations that could impact your eligibility for IRS penalty relief.

Explore Your Options for IRS Penalty Abatement With the Tax Group Center

Do you want to find out if you qualify for penalty relief from the IRS? The Tax Group Center has a team of tax professionals, lawyers, and CPAs waiting to help you discover options for getting penalties wiped from the slate. Let us help you qualify for relief to ensure that you don’t miss your chance to walk away from costly IRS penalties. We help people get cleared for penalty abatement every day!