If you owe money to the IRS, you may already be facing financial hardship. This may be the reason you were unable to pay your taxes in the first place. Now you need to pay the taxes you owe along with the IRS penalties and interest accrued on your debt. Many people simply do not have the money to pay such a large lump sum to the government. Fortunately, the IRS offers several ways to make this debt more manageable, one of which is an Installment Agreement.
Weigh the Pros and Cons of an Installment Agreement
When you obtain an Installment Agreement, you make smaller monthly payments to the IRS at a rate agreed upon by both parties. Installment Agreements are easier to obtain since the IRS adopted the Fresh Start program in 2012. Typically, the IRS will grant an Installment Agreement to anyone who requests one, provided that you have a previous history of paying your taxes and all your current taxes are filed and up-to-date.
The biggest advantage of an Installment Agreement is that the government cannot file a tax lien against you while you are making your payments, if one has not already been filed. However, there are some drawbacks, including the interest that continues to accrue. Combined with IRS penalties, interest can reach 8% to 10% a year.
If you are considering entering into an Installment Agreement with the IRS, Koontz & Associates, PL can help you examine your options and choose the best way to manage your debt with the IRS. If you decide that an Installment Agreement is the right solution for you, we will help you through every step of the process from filing an application to making your final payment and obtaining the release.
Different Types of Installment Agreements Benefit Different Taxpayer Circumstances
There are three types of Installment Agreements available and Koontz & Associates, PL can help you decide which type you qualify for and which would most beneficial. They include:
Because there are advantages and disadvantages to all three types of Installment Agreements, it is essential that you carefully investigate which one will benefit you the most. Koontz & Associates, PL will examine your financial situation and help you determine which type of agreement is best. Once that is determined, an agreement is made with the IRS.