If the IRS sends you this notice, it means that they received your payment proposal to pay the taxes that you owe; however, they need more information about your financial situation. The information required is income and expenses related. This type of notice also falls under the category of “unpaid balance”. This means that you were contacted in the past about taxes that you owed and you already agreed with the IRS that you will pay what you owe and you will set up a particular payment plan with them. The IRS received this but need to know more about your financial situation before moving forward. That is the essence of the notice.

REASONS FOR RECEIVING IRS NOTICE LT24

There are some reasons why the IRS will send taxpayers this notice. They include:

  • The taxpayer either filed a tax return with a balance due or the IRS filed a tax return on his or her behalf with a balance due.
  • The taxpayer contacted the IRS and indicated that he or she was unable to pay the balance due in full, but would like a payment plan.
  • The IRS sent notice LT24 to request that the taxpayer contacts them within 7 days to discuss his or her financial situation. The letter asks that you have income and expense information available when you call.

When you are ready to contact the IRS, You can call them at the telephone number listed on your letter within 7 days from the date the letter was sent to you. You are calling the IRS to set up an installment agreement but they require information to do so. If you don’t have the information they need, they won’t be able to set up an installment agreement for you.

According to the IRS, there is a fee for setting up an installment agreement. If you provide the information the IRS needs to set up an installment agreement, then they will approve your payment plan. They charge an initial setup fee. If you apply online through Online Payment Agreement (OPA), the fee is $149. If you apply by phone, mail, or in person, the fee is $225.

Installment agreements are monthly payments you make to the IRS when you are financially unable to pay your tax debts immediately. There are advantages to setting up an installment agreement. One of them is that the fee would be pay for tax penalties will be cut into half of the supposed amount. The best type of installment agreement for your situation depends on the amount of taxes that you owe, how fast you can pay them, and your financial circumstances at that moment.

CONDITIONAL INSTALLMENT AGREEMENT

This is one of the many installment agreements offered by the IRS. This particular one relates better with this situation. According to the IRS, when a taxpayer is unable to fully pay immediately and does not qualify for a streamlined installment agreement, the taxpayer may still qualify for a conditional installment agreement (or a six-year rule agreement). Taxpayers are required to provide financial information in these cases, but are not required to provide substantiation of reasonable expenses. All expenses may be allowed if: the taxpayer establishes that he or she can stay current with all paying and filing requirements, the tax liability, including projected accruals, can be fully paid within six years and within the Collection Statute Expiration Date (CSED), expense amounts are reasonable. .

A conditional installment agreement is an IRS payment plan that takes your full financial situation into consideration. When setting up this more complicated agreement, the IRS will require you to provide a financial statement listing all your assets (home, cars, bank accounts, etc.), income and expenses. Usually, the IRS will allow you only a certain dollar amount of expenses based on approved financial standards set by the IRS for each expense type (housing, car payment, etc.). If you owe more than $50,000, but you can pay the full balance in six years, the IRS may allow expenses over the standards.

For any tax balance of more than $10,000, the IRS will likely file a tax lien. If you can pay your balance to under $50,000 to qualify for a streamlined installment agreement, it’s best to do so, because the IRS won’t file a federal tax lien.

A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A federal tax lien exists after the IRS:

  • Puts your balance due on the books (assesses your liability)
  • Sends you a bill that explains how much you owe (Notice and Demand for Payment) and
  • You neglect or refuse to fully pay the debt in time.

There is a term called “Ability Pay” coined by the IRS. From the IRS point of view, they look at the taxpayer’s income and assets to make a determination on his or her ability to pay taxes owed.

From the IRS perspective, your ability to pay is the amount you can pay toward your tax balance. The IRS uses specific calculations to determine this amount for some types of IRS payment plans, called installment agreements. The IRS determines your ability to pay using the financial statement and information you provide, listing all your assets (home, cars, bank accounts, etc.), income, and expenses.

If you owe taxes and don’t qualify for a simple payment plan, or if you don’t think you can make any payments toward your tax balance, the IRS will calculate your ability to pay. All you have to do is show them the circumstances of your finances.

If you don’t respond to the letter at all, the IRS may take enforced collection action to collect the amount including the filing of a Notice of Federal Tax Lien, or garnishment of your wages or other income sources or bank accounts.

NOTICE DEADLINE – 7 days from the day the IRS sends you the notice. If you miss the deadline, the IRS may proceed with enforced collection actions such as issuing a levy or filing a notice of federal tax lien.