If you cannot fully pay off your balance you may claim hardship where you make payments based on your ability to pay and not on the amount you owe. If the circumstances apply, you may not need to pay anything.
This process sounds simple but you should know that the IRS has strict rules on what they consider to be necessary and reasonable living expenses when considering what you can afford to pay. If the IRS sees that you are paying for items they will not consider in the calculations, you could be placed in an agreement that will not work.
The Tax Resolution Institute knows EXACTLY what the IRS will and will not allow. By planning properly and creating a comprehensive package to submit to the taxing agencies, we ensure that if you enter into an installment agreement, it will be for an amount you can comfortably afford over an extended period of time… Read in detail about Installment Agreements
An Installment Agreement is a workable payment plan between you and the IRS or State. The taxing agencies encourage you to pay the tax debt you owe as well as to file all unfiled income tax returns as quickly as possible.
Installment Agreement Types
When you or your business is unable to resolve a tax debt immediately, an Installment Agreement becomes an option that can be a reasonable option for you while at the same time is acceptable to the IRS and State. Some Installment Agreements require the full payment of the tax liability which is set into monthly installments paid over time. Other Installment Agreements allow you to partial pay your liability in monthly installments over time.
In order to be eligible for an Installment Agreement with the IRS or state, all unfiled tax returns must first be filed. Once all returns are filed and an accurate tax liability is determined, the Tax Resolution Institute may begin negotiating an Installment Agreement on your behalf. Keep in mind that it is the goal of the IRS and State is to collect as much tax due before the statute of limitations for collection expires. By law, the IRS has the authority to collect outstanding federal taxes for ten years from the date of assessment. State statutes vary. Our goal is to set up an agreement having you pay as little as possible. If you choose to pay more you may do so at your option.
If we are able to prove that you cannot full-pay your liability, even over time we will enter you into a payment plan that allows you to continue covering their monthly expenses and pay less than the amount owed in taxes by making monthly installments. This is what is referred to as a Partial Pay Installment Agreement (“PPIA”). The IRS charges a nominal fee to set-up an Installment Agreement. In addition, you are required to stay in compliance. This means that they must, in addition to making the agreed upon monthly installments, continue to file future tax returns and pay all future tax liabilities in full. This must be done over the entire course of the Installment Agreement period otherwise the taxpayer will be in default and responsible for their full liability due immediately.