Can You Pay Taxes Owed In Installments – If you owe taxes to the IRS, you may feel overwhelmed by the idea of paying off your entire balance in one lump sum payment. Although some taxpayers are required to pay the entire tax balance at once, there may be other options available to you that can settle your tax balance for less than what you owe. One such tax resolution option is known as a partial payment installment agreement (PPIA).
PPIA is an IRS tax resolution that allows you to settle your tax balance for less by making monthly payments over a period of time. If you think PPIA might be right for you, here’s what you need to know.
Can You Pay Taxes Owed In Installments
While some taxpayers may be able to pay their tax balance in full in one lump sum, there may be other options you may want to explore.
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Each tax resolution comes with different requirements for paperwork and eligibility. If you owe taxes to the IRS, you may be able to negotiate your tax bill with an experienced tax attorney from Tax Polston on your side. Some of the tax resolutions available to you may include:
When you seek IRS tax assistance, you deserve an experienced IRS tax attorney by your side. Reaching out to a tax attorney at Polston Tax means we handle negotiations with the IRS, making the process simple for you. With our team acting as your advocate, the situation will be less stressful.
A partial installment agreement refers to a type of payment plan with the IRS where you can pay a portion of the taxes you owe in monthly payments until your tax liability expires. With a PPIA, you can pay your tax balance for less than you owe and avoid large payments. The PPIA can prevent further collection action from the IRS, such as seizure or levy.
The IRS only has a certain amount of time to collect your tax balance after you file your tax return. After this time limit expires, your tax balance is forgiven. Like any compromise offer, a PPIA has the potential to deliver substantial tax savings. The monthly payment you pay will be determined by the amount you owe the IRS and the amount of disposable income you have each month.
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If you are struggling to pay your tax bill, contact us at Polston Tax to learn more about our installment agreement service.
A standard installment agreement involves a minimum monthly payment that allows you to pay off your tax bill within six years. For example, if you owe $18,000, the IRS will expect a monthly payment of at least $250. However, in some cases, the IRS may allow more or less time for an installment agreement.
People who cannot afford to pay on a standard installment agreement may be entitled to a smaller payment with the PPIA. With smaller payments, it takes more time to pay off your total tax liability. As a result, your tax bill may not be paid o
Ff complete before expiration. This means that a PPIA allows you to make smaller, cheaper payments and allows part of your tax liability to expire unpaid.
Irs Partial Payment Installment Agreement
Continuing with the example above, if you owe $18,000 and can’t make the $250 monthly payment, the IRS may accept a $100 payment. During the next six years, you will pay $100 every month for a total of $7,200. The rest of your tax bill will expire, and you will not owe the IRS anything else.
At Polston Tax, we can help you communicate and negotiate with the IRS and get the PPIA you can afford.
PPIA is an attractive resolution for taxpayers, as you can save thousands of dollars. To get a PPIA, you must fill out an application and send the IRS a full financial disclosure. Depending on your financial situation, you may have to
To be eligible, you must have all required tax returns and must make required tax payments. If you don’t have one, the IRS can’t negotiate a resolution with you. To qualify for PPIA, you cannot have:
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If you’re not sure whether you’re eligible for PPIA, contact us at Polston Tax. We can review your financial situation and determine whether you qualify for PPIA.
Although there are exceptions, the IRS will usually only accept a PPIA if you lack sufficient assets to liquidate and disposable income each month to pay through an installment agreement. The IRS must also believe that you will not earn enough money to pay your taxes in future years.
The purpose of establishing an installment agreement with the IRS is to settle for less than what is owed. Remember, however, that the IRS will only determine what it believes your agency can reasonably pay. The IRS will look at the following conditions when considering whether you qualify for PPIA and what your monthly payments should be:
When trying to get a PPIA approved, the IRS may request substantiation for the expenses you claim or ask for a recent bank statement. Assets, income and expenses that can be reviewed by the IRS include:
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The IRS will ask about almost every aspect of your finances. They try to see if you have more money than you say you do. You or your tax attorney can answer for certain expenses and try to keep the monthly payment amount low.
While you can technically settle with the IRS yourself, the process can be complicated, and you can be sure that the process is handled properly when you have a trusted tax attorney by your side. If you are concerned about the amount you owe the IRS and navigating negotiations with the federal agency, contact us at Tax Polston.
When applying for a PPIA, there are several steps to the process. First, review your tax debt and check you actually owe it. If you believe you do not owe these taxes, hire a tax attorney and communicate with the IRS. If you receive a notice from the IRS, call the number listed on the notice to discuss the amount the IRS claims you owe.
If you owe this tax, you will fill out a Collection Information Statement. This will gather all of your financial information so the IRS can look at your current finances and see what you can afford. You will then also fill out Form 9465 Installment Agreement Request.
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You can fill out Form 9456 to request a PPIA from the IRS if you cannot afford the total amount you owe, as listed on the IRS notice or your tax return. Some of the information you will need on this form includes:
Make sure you can afford to pay — if you default on a payment agreement, you may have to start the whole process over. If you need further guidance in completing this form or estimating what you can afford to pay each month, contact us at Polston Tax.
You will send a Collection Information Statement and Form 9465 to the IRS, along with your most recent tax return. If you have a tax attorney, they can contact the IRS on your behalf to request a PPIA.
The IRS will then contact you or your tax attorney and let them know if they need more information – it can be helpful to gather financial documents that support the information on your form in advance. If the IRS requires more information, the IRS will let you know what it needs and give you a deadline. Missing the deadline may cause the specialist to reject your offer. After receiving the IRS requested information, you may have to defend your position, and it may take time before making a decision.
Quarterly Tax Calculator
The IRS may review your PPIA every two years and request updated financial information. The IRS is looking to see if your financial situation has improved and if you can afford to pay higher payments. To avoid default on your PPIA, respond to any request for your updated financial information in a timely manner. The financial information you’ll need to provide includes your expenses, income and the amount you owe, such as your mortgage and car loan payments.
If your financial situation has improved, the IRS may try to increase your monthly payments. You or your tax attorney can try to fight this increase in monthly payments, but you may need to provide proof that you cannot afford the higher monthly payments. Although you won’t have a bank levy or garnishment against you when your PPIA is approved, liens can be filed against you and your property.
The tax lawyers at Polston Tax can help you throughout the PPIA process. Applying for a PPIA can be time-consuming, so work with us to make the process simpler and easier.
The IRS has a limited amount of time to collect your tax balance. This is known as the Collection Statute Expiry Date. Normally, the IRS only has 10 years to collect the tax balance from the time your tax return is filed. After that, your balance is forgiven. With PPIA, you pay your monthly amount until CSED ends. This is when the remaining balance you owe will not be collected.
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In some cases, however, the CSED can be extended. After requesting an installment agreement, the initial 10-year CSED may be suspended while your request is pending. If your request is denied, the collection time is delayed for another 30 days. This will also happen if you default on payments with the IRS
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