What happens when you’re not capable of paying back your entire tax bill when it’s due? You may assume that things like high fees, serious penalties, and arrest could be in your future. The good news is that it doesn’t have to come to that if you act swiftly.
The IRS and state taxing entities are often willing to provide taxpayers with installment agreements and payment plans that make it possible to pay off tax debts over time. Of course, you can never assume that you are eligible for or entitled to one of these installment options. You need to do your research, apply for a program, and follow the instructions of the IRS closely. The IRS or state taxing authority will require that you complete a personal financial statement and (if necessary) a business financial statement. This very important and detailed step should be handled with the help of a qualified tax professional to ensure you have every chance of being granted an IRS payment plan.
Find out what you need to know about entering into an IRS installment agreement if you’re facing a tax bill that you can’t afford.
Who Can Qualify for an IRS Installment Agreement?
An installment agreement from the IRS could be an option for anyone who is unable to pay back taxes. However, you will need to be in compliance with certain requirements before the IRS will consider approving your application:
- You must be current with all filed tax returns
- You will need to disclose all assets and cash
- You must be able to prove that you lack the adequate cash available to pay off your tax debt by providing records of your checking, savings, and brokerage accounts
- You must be able to prove that you’re unable to borrow the amount you owe in tax debt using loans or refinancing options
- You must be able to prove that you lack adequate equity in retirement accounts to pay off your debt
Is an installment plan your only option if you cannot pay off the tax debt you owe? Not necessarily. You actually have several options to consider if your goal is to avoid penalties, fees, and other repercussions that can stem from owed taxes. The list includes an Offer in Compromise (OIC), Currently Non Collectible (CNC) status, and penalty abatement. You should explore every option on the table if you owe money to the IRS.
How to Apply for an IRS Installment Agreement
If you owe money to the IRS, time isn’t necessarily on your side, so get the ball rolling as quickly as possible to avoid penalties and consequences that could be coming your way. The good news is that the IRS is often willing to provide you with protections once you formally enter into an agreement for getting your back taxes paid. The Tax Group Center is here to help you every step of the way. Our team of licensed tax professionals, CPAs, and lawyers is backed by 30 years of experience. We’ll help you make the process of applying for a payment plan from the IRS as smooth as possible!