In this Denver accounting and tax services blog, we will discuss the topic of establishing a payment plan with the IRS when you owe less than $50,000 in taxes. All prior year or delinquent tax returns must be filed and processed before you can enter into an Installment Agreement with the IRS. Establshing a payment plan is by far the easiest and quickest way to alleviate the presence and stress of having the IRS in your life.
If you owe under $50,000, a payment plan can even be organized online. This is called an Online Payment Agreement and below is the IRS link: https://sa1.www4.irs.gov/irfof/lang/en/eiaTPstatus.jsp
Payment plans can also be set up over the phone or on Form 9465. The IRS charges a fee of up to $105 for granting an Installment Agreement.
The conditions of the Installment Agreement are that the Payer must pay the full dollar amount that they owe, including penalties and interest, within 5 years. The Payer must also remain current and continue to file their taxes on time during the period of repayment. Current is defined as filing all of your tax returns on time, and making on-time payments to the IRS, including estimated payments. The Payer must also agree to forfeit any potential tax refunds from the IRS until the full delinquent amount has been paid. Failure to comply with any of these conditions may cause the IRS to send a letter that comprises the Installment Agreement. In this case the IRS may place a lien on you which allows them to begin levying your bank accounts and garnishing your wages. Having a lien filed against you can also make it very difficult to acquire a loan.
While Installment Agreements under $50,000 can be set up by taxpayers themselves, if you would like a trained Denver accountant and tax professional to guide you through the process please give Bloch, Rothman and Associates a call for a free Denver tax service consultation.