Paying Taxes You Owe in Installments

Posted on December 20, 2021

Paying Taxes You Owe in Installments

Paying taxes is complicated when you do not have the ability to pay the entire tax liability in lump sum. As most taxpayers are financially capable of paying their tax debt in installments over a period of time, they choose Installment Agreement plan of the IRS to pay the taxes they owe. Some points you need to consider before deciding to apply for Installment Agreement are explained below.

Penalties and Interest on Taxes You Owe

Taxpayers can only avoid interest if they pay the entire tax bill in a single payment. Under Installment Agreement, the IRS will charge interest on the amount that remains to be paid. In addition to the taxes they owe, taxpayers also need to pay penalty to the IRS.

Those taxpayers who use the services of a tax relief service for tax debt payment may get the penalty reduced or removed depending on their case. The tax help, in the initial stage, will also assist taxpayers in analyzing how much they owe to the IRS and over what period of time they can comfortably pay the tax debt amount.

If You Owe Taxes & Choose Installment Agreement

A request for Installment Agreement should only be made after a taxpayer has:

  • ·         Filed all previous tax returns
  • ·         Can pay the minimum of $25 per month towards fulfillment of the tax debt
  • ·         Has the ability to pay the installments over the period of time specified

Filing for an IRS debt payment plan that you clearly do not qualify for can attract penalty from the IRS. Therefore, it is wise to use the services of tax help to analyze, prepare and negotiate a tax case. After you have qualified for Installment Agreement, your future refunds will be applied to your tax debt until the entire tax liability is paid in full.

Getting Best Resolution of Taxes You Owe

You can apply for Installment Agreement if you owe taxes more than or less than $25,000. Those who owe taxes less than $25,000 may apply for Installment Agreement online, but that resolution will not be the most advantageous resolution for taxpayers, as it will be agreeing to all demands of the IRS. To get a resolution that may include reduction or removal of penalty, reduction of interest, and speedy and comfortable payment of taxes owed, taxpayers may take outside help.

An advantage of using the services of a tax resolution company is that it houses tax attorneys and enrolled agents. Tax lawyers are essential for negotiating with the IRS. Their expertise and experience is invaluable in achieving a resolution that is most beneficial for taxpayers. By using the many skills of different tax experts, a tax resolution company helps taxpayers in reduction of tax debt, reduction/removal of penalties, stopping or avoiding tax liens and tax levies, making appeals to the IRS, and getting a stress-free and most favorable resolution.