If you owe the Internal Revenue Service tax money and cannot pay in one lump sum, you may want to seek to make an installment arrangement with the IRS. In order to qualify for a partial payment plan with the IRS you will need to be current with your most recent income tax filing and you must have submitted all previous years’ income tax returns, as well.
An installment agreement can be reached under the terms of partial payment. That is to say, that if you owe the IRS back taxes and you come to an agreement to make a settlement payment, say fifty cents on the dollar, to satisfy the claim, you can make those payments on an installment plan even though the IRS will not collect your debt in full upon completion of payments. Once you have paid the agreed amount of settlement, the IRS will forgive the balance.
If you owe twenty-five thousand dollars or under, you can usually take sixty months to pay on installment. If you owe over twenty-five thousand dollars, you will have to negotiate the plans as per your situation.
Before going into this type of arrangement, you need to know exactly how much money the IRS has determined you owe, including interest and penalties. If you are uncertain about the sum, the Internal Revenue Service will provide you with the breakdown and copies of your income tax filings.
You might want to engage the services of a tax resolution expert to help you in filing forms and applying for a tax resolution installment option. After consulting him, you will have to arrive at a conclusion of how much you can afford to pay. In support of this conclusion, you will need to provide the IRS with three months documentation relating to your proposed income versus expenses. You will then need to send the IRS a letter expressing your desire to resolve the matter via an installment arrangement. Attached to the letter, you will include all necessary forms and documentation.
When you receive the OK from the Internal Revenue Service, make sure you do not miss any monthly payments. You will be offered the option to pay via money order, check, credit card, automatic withdrawals, or electronic transfer. The two electronic options (transfer, auto pay) are probably your best, as they eliminate the possibility of missing paperwork or overdraft.
Please note that while you are making your installment payments, penalties and interest will continue to add up.