IRS Lets Some Taxpayers Pay Off Their Debt in Installments
For various reasons, many people whom the IRS accuses of owing a hefty income tax bill choose not to contest the claim. Perhaps they do not dispute owing the money, or the size of the debt. Maybe, for personal reasons, it is not worthwhile to go through the time and expense of fighting the IRS.
Taxpayers in this situation still have legal options that could help them resolve their tax issues with as little pain as possible. One of these possibilities is creating an installment agreement.
An installment agreement is intended for taxpayers who cannot pay their bill in full. Since alleged tax bills can easily reach into the tens or hundreds of thousands, it is easy to imagine that paying off the debt all at once is impossible for many people.
Just submitting a proposal for an installment agreement can be highly useful. While the agreement is pending, the IRS is prohibited from taking most collection actions, except for filing a Notice of Federal Tax Lien. This means that the agency cannot garnish your wages, seize your property or levy your bank accounts. This is a huge relief for many taxpayers during the collections process.
Those with debts between $25,000 and $50,000 now enjoy an easier time setting up an installment agreement than in years past. In some cases, the IRS now no longer requires a financial Collection Information Statement, and has taken other steps to streamline the process for taxpayers in that debt range.
Working out a deal to pay in installments may not be the ideal solution for every taxpayer facing a huge bill. Consulting with a tax attorney may make the range of options clearer.
