How Do IRS Payment Plans Work?
When a taxpayer gets qualified to pay the return on a Partial payment plan through a Monthly Installment Agreement, the IRS determines the amount to be paid. They base this amount on the financial ability of the taxpayer. This form of payment is known as an IRS payment plan or Partial Pay Installment Agreement.
For debts less than $25,000, the IRS does not require a prepared financial statement. If the taxpayer owes more than $25,000 then they need to provide a financial statement to the IRS. This will help the IRS decide the amount the tax payer can pay on a monthly basis.
If your case is properly prepared, the IRS can also accept the 60 Month Payment Plan. The IRS has the right to deduct the payment directly from the taxpayer’s pay, bank account or credit card. This plan is also known as a Streamline Agreement.
IRS Partial Payment Plan is a useful option for taxpayers struggling with delinquent taxes. It allows taxpayers to pay their tax debt in manageable monthly installments over time. This program provides a debt relief option that does not require full payment of the tax debt upfront, making it an attractive option for those facing financial hardships.
If the taxpayer cannot submit the financial installments in the specified period, there are three options through which expansion of payment plan can be requested.
Show More
Show Less
IRS Partial Pay Installment Agreement (PPIA)
There are a few qualifications that need to be met in order to receive a PPIA (Partial Pay Installment Agreement):
- You must owe at least $10,000 to the IRS (this includes penalty fees and interest)
- You can never have had an Offer in Compromise with the IRS
- You can’t be in bankruptcy
- You are unable to liquidate your assets, your assets aren’t able to cover all your IRS debts, or/and you can’t use them as collateral
If you meet these requirements, then you can apply for a Partial Pay Installment Agreement with the IRS.
Let Us Help You Understand
Assume that a taxpayer has a debt of $100,000 in the year 2000. The Statutory period to collect this expense is April 15, 2011. If they meet all requirements, what happens next?
Tax Help MD helps you understand IRS payment plan terms and fill out the Form 433-F. The financial statement is prepared for the taxpayer, through which it is shown that the tax payer has discretionary income of $400 per month to pay the IRS. There remains only 10 months (as of July 15, 2010) to collect on the debt. In this circumstance, the IRS has the ability to accept a payment of $400 per month for the remaining period (10 months) as full payment on the original debt of $100,000. This allows the taxpayer to settle his or her debt for as little as $4,000.
Show More
Show Less