IRS Payment Plans

As a Tax Attorney, I have helped taxpayers, both individuals and businesses, across the country negotiate a payment plan with the Internal Revenue Service. A payment plan, also called an Installment Agreement, is one of the quickest solutions that can be negotiated with the IRS. This is when you set up a payment plan that if you make your tax debt will be taken care of. In a payment plan you set up an agreed amount of payment that you make every month. The IRS will let you pick a date when they will debt your bank account so you will not accidentally forget to send them their money. This is the most common type of solution to dealing with the IRS.

HOW DO I QUALIFY FOR A PAYMENT PLAN?

The only requirements that you must meet before the IRS will consider a payment plan are:

• You must have filed all required tax returns
• You must not accrue any additional tax debts – the IRS will want proof that you are not going to owe again this year. Usually this means they want you to adjust your withholding at work, or begin making your required tax deposits on time.

If you meet both these requirements you are likely to be eligible to be considered for a payment plan.

HOW MUCH WILL I HAVE TO PAY EACH MONTH?

In most cases, the IRS is going to require that you provide a financial statement detailing your assets, income, and expenses. The purpose of this financial statement is to determine the following:

• Can You Sell Anything?: If you can sell some assets to pay the IRS, they may demand that you do so or force you to do so by increasing your payment. They don’t want to put you on a payment plan unless it is the only way for them to get paid.
• How Much Can You Afford?: The IRS will review your monthly income and expenses to determine how much they think that you can afford to pay them. Typically this is the amount that they will demand from you. This will require documentatin of your

My job, as your Tax Attorney, is to negotiate this monthly amount to be as low as possible. This is accomplished by presenting a realistic picture of what you can afford to send the IRS, rather than letting the IRS strong-arm you into a payment agreement that you cannot afford to pay while also meeting your basic living expenses. Such an agreement will only result in you defaulting the agreement or accruing a new tax debt in the future, neither of which are desirable to you or the government.

WHAT IF I CAN’T AFFORD TO PAY ANYTHING?

If you cannot afford to pay the IRS anything each month, then we need to prove that to them. You do this in the same way that you propose a monthly payment to them — by completing the financial statement detailing your assets, income, and expenses

If you cannot afford to make monthly payments and can prove it, then the IRS will place you into currently not collectible status, which means that they won’t require a monthly payment until you get back on your feet. This is basically just like a payment plan, but for $0.00 per month.

Usually, but not always, if you qualify for currently not collectible status you also qualify for an offer in compromise.