Questions Asked About the IRS Payment Plan Program

Finding out that you owe the government money in taxes can be daunting. This debt can grow really fast, and the IRS has the power to confiscate your possessions. Before your tax problems get to this point, you have options for reaching an agreement with the IRS on how to pay the debt.  Frequently asked questions about the IRS payment plan program are: ·  How do I set up a payment plan with the IRS? ·  Can I have multiple payment plans with the IRS? ·  Who qualifies for a payment plan? ·  How do I make payments on my payment plan? ·  Will the IRS take my federal and state tax refund? ·  What happens if I miss a monthly payment from the IRS payment plan or payment from an IRS payment agreement?

·  Why would the IRS terminate my existing payment plan?

The Internal Revenue Service or IRS is in charge of collecting various taxes when due. If you end up owing the IRS a tax liability, it can come with considerable fines and penalties, such as daily interest. IRS tax debt can grow quickly, so it’s essential to take the appropriate steps to pay it off as soon as possible. You may have to pay taxes when you file your tax return at the start of the year, or the IRS can send you an invoice. Freelancers, investors, and property renters may also be responsible for making quarterly estimated income tax payments to the IRS. Businesses have to consider employment and consumption taxes, with possible monthly or semi-annual due dates. For those who don’t file on time, the IRS can file a substitute return on your behalf. A substitution statement cannot include all deductions or credits that a taxpayer can claim. Depending on your tax situation, you may want to consider consulting with an experienced tax attorney. Failure to pay can cause the IRS to take action, including a possible Federal Tax Lien Notice on your personal or business property. Continual failure to pay an outstanding balance can lead to tax collection or the seizure of your properties to satisfy the debt. The IRS has the power to seize property ranging from investments and bank accounts to wages and secondary houses or vehicles. If you can’t pay your entire tax debt after verifying the actual amount owed, there are options available to you. A tax professional can use her knowledge and experience in dealing with the IRS to negotiate a settlement. You can also try to file a payment agreement with the IRS yourself. Read on for more information on IRS payment plans.

1. How do I set up a payment plan with the IRS?

The best way to settle a tax debt is to make sure the amount owed is correct and then pay the huge sum as soon as possible. There are fines for not filing, fines for not paying, and fines for underpayment. The daily capitalization rates are accumulated in the balance due, which is recalculated quarterly. There are many ways to establish a payment plan with the IRS. Depending on your specific tax situation, you can set up an IRS tax payment plan online, over the phone, by mail, or even in person. To apply by mail, you must complete and submit IRS Form 9465 (Installment Agreement Request). Each payment option has different rates and terms to consider, as well as debt amount thresholds. To get started, you will be asked to provide your name, 2. What kind of payment plans are there?  There are several payment plan options for taxpayers who owe money from the IRS, including short and long-term payment plans. Short-term installment agreements are 120 days or less. Long-term plans can last up to 72 months (six years). Each option requires different types of rates. Longer agreements have higher installation costs, but some low-income taxpayers can lower their installation costs. Long-term payment plans with automatic withdrawals from a bank are called Direct Debit Payment Agreements (DDIA).

2. Can I have multiple payment plans with the IRS?

No, you cannot set up multiple payment plans, but the IRS will cancel an existing payment plan if a new amount is owed. You can then request a new payment agreement that shows the new amount. This allows you to combine balances from multiple tax years into one settlement plan

 3. Who qualifies for a payment plan?

The payment plan you are eligible for depends on the amount you owe. Those who owe $ 100,000 or less can apply for short-term payment plans of 120 days or less. Those who owe $ 50,000 or less can establish a long-term payment plan for 120 days. To be eligible for a payment plan, you must have submitted all required tax returns, as well as any required or missing payments. You may also need to consider how to make estimated payments in addition to the installment agreement payments.

4. How do I make payments on my payment plan?

Some payment plans involve certain payment methods. For example, the Direct Debit Installment Agreement (DDIA) will automatically withdraw payments from your bank account (usually your checking account). In some cases, you can also pay cash using the IRS ‘Pay Near Me option. However, this is limited to payments of up to $ 1,000 per day and does not include the fee for each payment. If you wish to make a payment online, you may want to use the Electronic Federal Tax Payment System (EFTPS). Other methods include paying by check, money order, debit card, or credit card. Each payment method may incur unique costs or fees.

5. Will the IRS take my federal and state tax refund?

Depending on your situation and the taxes owed, the IRS may consider seizing the federal or state tax refund. If you establish a payment agreement, any refund will automatically be applied to liability. Your refund will be applied to the amount owed and will reduce your debt. If you are married and file a joint return, and your spouse incurs a tax debt, the IRS will hold you equally responsible for the debt. You may be able to be eligible for tax debt relief through the IRS innocent spouse options. Consider contacting a tax expert for more information.

6. What happens if I miss a monthly payment from the IRS payment plan or payment from an IRS payment agreement?

If you do not meet up with an installment payment, the IRS may choose to terminate your payment plan. Before getting to this point, you can try calling the IRS to get temporary permission not to make a payment. You can also try to renegotiate the monthly payment amount, especially if your financial situation has changed and you cannot pay the amount.

7. Why would the IRS end my existing payment plan?

The IRS has the right to terminate an existing payment plan if you don’t meet up with a monthly payment or if you review your plan. For example, if you owe unpaid taxes from a previous year and incur additional debt from a second year, you cannot simply add it to the existing plan. Instead, the IRS can terminate the original plan when a new amount is owed, allowing you to request a new payment plans that reflects the new amount.