Things the IRS May Not Tell You About Installment Agreements

If you have tax debt, how you resolve it with the IRS depends on how much you owe. When you call the IRS yourself, they may, or may not advise you as to your options in setting up an Installment Agreement. They will definitely ask you the following:

• Can you full pay..now...in 30 or 60 days?
  
• Can you borrow from friends or family
• Can you pay off your balance with a credit card?
• Can defer payment on other bills to pay your taxes?

What they may not tell you, is if you balance is under $10,000 you are guaranteed an Installment Agreement and do not have to provide financial information. They may require you to tell them you bank name and your employer, so they have levy sources should you not fulfill your agreement.

If you owe $25,000 or less, you will probably qualify for what the IRS calls a Streamline Installment Agreement. Again you are not required to provide you financial information for this payment plan either. You have up to 5 years to pay off your balance. The kicker comes if your balances are old and the statutes are close to expiring. This will cause your payment amount to increase so that all balances are paid before the statutes expire.

If you are unable to make the payment that they say it would take for a Streamline or you owe over 25,000, or are unable to make any payment at all, you will be required to provide a financial statement. You will have to list all your assets, income and expenses. If you have equity in your home they will require you to try to borrow against it. If you have a 401K or IRA they will most likely expect you to liquidate.

You do have the right to have someone represent you before the IRS, if you find the rules to confusing and need some help. An Enrolled Agent can help you and is much less expensive than hiring a tax attorney. An Enrolled Agent can contact the IRS on your behalf and negotiate your Installment Agreement.