Individuals with tax debt that they are unable to pay off their entire debt with the IRS may seek out assistance. Tax negotiators are one option that can be used while settling tax debt with the IRS. Tax negotiators help to organize a tax payer’s financial situation and decide what course of action can be taken in order to make a settlement agreement with the IRS. Some of the settlement agreements with the IRS for tax debt include Currently-Non-Collectible (CNC), Installment Agreement (IA), Traditional IA, Partial Pay IA (PPIA), Stair-Step IA, and other settlement options.
If a taxpayer can make monthly payments and are unable to pay their tax debt immediately, they may be eligible for an Installment Agreement with the IRS. There are some steps a taxpayer must do before entering into an Installment Agreement with the IRS. The taxpayer must file all required tax returns and be up to date with the IRS. All tax refunds given by the IRS in the future will be applied to the tax debt until the debt is settled with the IRS. In order to eliminate some of the penalties and interest that will be accrued during the monthly payments; the taxpayer may consider using loans or credit cards to pay the tax debt in full. The taxpayer then must determine the largest monthly payment they can make in order to pay back their tax debt.
Installment Agreements differ from other tax debt settlements because while making payments, interest and penalties are accumulating on the portion of the unpaid debt. The minimum monthly installment payments must be $25. There are also differing fees required while filing for an IA. A one-time fee is charged to set up the agreement ($52 for direct debit, $105 for non-direct debit agreements, and $43 for low-income individuals meeting certain requirements). There is also a reinstatement agreement fee of $45 if the terms are not met anytime through the duration of the agreement.
The process for applying and being eligible for an Installment Agreement repayment with the IRS begins with filling out and application and meeting certain requirements. A Form 9465-FS Installment Agreement Request must be filled out if the taxpayer owes $50,000 or less in individual tax, penalties, and interest. A Form 433-F Collection Information Statement must be filed if the valued owed is more than $50,000. A Notice of Federal Tax Lien may be filed to guarantee the government’s interest on the unpaid tax debt until the entire payment is made by the taxpayer.