Berkshire Tax Resolution - IRS Payment Plans
What is an IRS Payment Plan (Installment Agreement)?
An IRS payment plan or Installment Agreement is an agreement between a Taxpayer and the IRS to pay a back tax liability, explains Berkshire Tax Resolution.
How do I Qualify for an IRS Payment Plan?
Berkshire Tax Resolution would like to inform you that you must be current and compliant with all tax filings and payments to qualify for an IRS payment plan. This includes making current Federal Tax Deposits as a business and estimated tax payments (or sufficient withholding) as an individual.
Berkshire Tax Resolution - Requirements for an IRS Payment Plan
To approve most IRS payment plans the IRS will require full financial disclosure either on a 433-A, 433-B or 433-F Collection Information Statement.
Types of IRS Payment Plans
The IRS has many Payment Plan programs available which will give you from four months to ten years to pay the back taxes, states Berkshire Tax Resolution.
In Business Trust Fund Installment Agreements (IRS Business Payment Plan):
Trust fund tax liabilities arise from the failure to collect and/or deposit IRS employment taxes. Berkshire Tax Resolution would like to point out that these are the most difficult IRS payment plans to negotiate. Collecting delinquent Employment taxes is top priority at IRS collections. Through the Trust Fund Recovery Penalty you can be held personally responsible for the back employment taxes of your business, clarifies Berkshire Tax Resolution.
Guaranteed IRS Payment Plan or Installment Agreement:
If you owe the IRS $10,000 or less of income tax, you are “guaranteed” an IIRS 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, explains Berkshire Tax Resolution.
IRS Payment Plan or Installment Agreement:
Berkshire Tax Resolution would like you to know that this is the simplest IRS payment plan. 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, clarifies Berkshire Tax Resolution.
IRS Partial Payment Installment Agreement:
Berkshire Tax Resolution sheds light on the fact that the IRS allows taxpayers who can’t pay their back tax liability in full within five years to 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. Berkshire Tax Resolution would like to inform you that, under a partial 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, explains Berkshire Tax Resolution.
Difficulties in setting up an IRS Payment Plan
The difficulty in obtaining an IRS payment plan depends on two things. The amount of back tax owed and the amount you can afford to pay. The more divergent these two are the more difficult it will be to get an IRS payment plan. The IRS is going to want confirmation that you can pay the back taxes along with assets and sources of income on file in case you don’t. The IRS has broad and extremely effective methods of collecting back taxes so setting up the right IRS Payment Plan is important.
Do I need professional help in securing an IRS Payment Plan?
Maybe, the main issue is getting an IRS payment plan that is within your budget. Berkshire Tax Resolution would like to point out that IRS payment plans are set by determining your monthly disposable income. In simplest terms your disposable income equals gross income minus allowed expenses. Knowing which expenses are allowed and how much is allowed is vital to getting an IRS payment plan you need, explains Berkshire Tax Resolution.
Often the IRS will force you into an IRS payment plan you cannot afford which leads to the accrual of a new tax liability. This is the worst thing that can happen. Berkshire Tax Resolution would like to point out that a new tax accrual will default the IRS Payment Plan and lead to another rash of penalties as well as increased IRS collection efforts.
Options for paying IRS Payment Plan
IRS Payment Plans can be paid via electronic funds transfer, EFTPS, by phone with check or credit card, direct payroll withdrawal, or by mailing in payments.