An IRS payment plan or Installment Agreement is an agreement between a Taxpayer and the IRS to pay a back tax liability. Because so many people are afraid of dealing with the IRS, they may fail to make the best financial decisions.
What is the cause of so much fear on the part of the taxpayer? Probably the idea that the IRS could file a federal lien against a wide range of personal assets, including wages and savings. Setting up a payment plan with the IRS gives you a little more time to pay off your tax debts.
Types of IRS Payment Plans:
Guaranteed IRS Payment Plan or Installment Agreement: if you owe the IRS $10,000 or less of income tax, you are “guaranteed” an IRS payment plan over three years.
Streamlined IRS Payment Plan or Installment Agreement: if you owe $25,000 or less in non-trust fund taxes, you qualify for a five year IRS payment plan.
IRS Payment Plan or Installment Agreement: Full financial disclosure is required and if the IRS determines you can pay the back tax debt faster by liquidating assets or borrowing the money they will most likely deny your request for an IRS payment plan. Otherwise a payment plan is established based on what they believe you can afford to pay.
IRS Partial Payment Installment Agreement: The IRS allows taxpayers who can’t pay their back tax liability in full within five years may qualify for an IRS payment plan. Full financial disclosure is required by the IRS, meaning that you must provide a detailed financial statement and proof of your income and assets. Under this payment installment agreement, you make monthly payments until you either pay it off or the statute of limitations expires.Any debt remaining after the statute of limitations expires is forgiven.