Dec 19, 2007

Your tax debt- Part 16 – The Installment Agreement- Another IRS tax resolution option

There are many types of payment plans or “installment agreements” to pay your tax liability. In fact, most people who are over the median income levels for the area, qualify for this option in tax resolution. Depending on how much tax that you owe, this can be a viable option for you.

There are several types of installment agreements (“IA”):

• The Full payment of tax agreements:
– The IRS “Streamline” IA (similar to no-income verification loan)
Do not fool yourself- this is not as easy as name implies.
– The negotiated IA to full pay based on ability to pay (your monthly disposable income
or “MDI”). There are many factors to this that need to be considered, including, but
not limited to:

• Will the IRS allow you actual expenses that you live on or the allowable living expenses, per their definition?
• Can you get an installment agreement based on actual expenses (i.e. a conditional expense installment agreement)?
• Can I get some time to adjust my lifestyle to the IRS allowed expenses (i.e. the 12 month adjustment for an IA)?
• What is allowed as an expense to the IRS? The IA is negotiated based on your ability to pay, how is this defined?
• The Partial Pay IA- the payment arrangement that does not pay the tax liability in full before the CSED expires
– This is much like receiving an OIC over the life of the collection statute of limitations or
“CSED”
– How are the equity in my assets considered?

The payment plan or “installment agreement” option has a maze of options that need to be explored before you attempt to negotiate with the IRS. It is recommended that you consult a competent tax professional for all of your options and questions.

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