It has happened to the best of people. You simply are not able to come up with the cash to meet your IRS tax liability. You are worried about the repercussions of not paying your taxes. Can the government come after your assets? Is the IRS going to garnish your wages or put you out of business with liens on your assets?
What are your options for paying out your debt to the IRS over time?
How much you owe, how long you have owed it, and the circumstances surrounding your IRS debt all come into play when determining how to handle a situation of government debt.
If you can’t make the payment in this time period, it is advisable to consult with a Washington, DC tax lawyer to understand what your options are. The following will give you some basic information about IRS installment agreements so you can have a more informed conversation with your tax attorney.
IRS Installment Agreements
The IRS may be inclined to accept payments through an installment agreement if the installments will cover the taxes due plus interest within the statute of limitations period for collections. Sometimes the IRS will tack on another five years to pay, but this is wholly dependent on the unique circumstances of each case.
If you cannot make the payments within the installment payment time period, the IRS can, at its discretion, classify the taxpayer account as uncollectible.
Simplified Installment Agreements
The IRS may offer simplified payment agreements that do not require the taxpayer to file detailed financial information or require upper level approval. Two examples include:
Guaranteed Installment Agreement: The IRS must accept installment payments in cases where the taxpayer meets all of the following criteria:
- Has not entered into an installment agreement in the previous five years
- Owes $50,000 or less (excluding penalties and interest)
- Has filed for and paid all taxes the previous five tax years
- Agrees to pay the tax liability within three years
- Stays current on tax payments
Streamlined Installment Agreement: It is likely that if the taxpayer qualifies for a guaranteed agreement, he or she will also qualify for the streamlined installment agreement. The requirements are:
- Tax liability, interest and penalties do not exceed $50,000
- The balance must be paid off in 72 months
- The taxpayer must be able to meet a minimum acceptable payment based on a statutory formula
There are additional options for business taxpayers, which will depend on factors such as whether and what extent the taxpayer is solvent enough to continue business operations and other factors that a Washington, DC tax lawyer can explain in detail. There may also be options for waiving the statute of limitations for collections and where the IRS might accept partial payments over an extended period of time.
Contact a Washington, DC Tax Attorney About IRS Installment Agreements
Facing IRS repercussions when you cannot pay your tax liabilities can be stressful for you, your business, and your family. Contact DC tax lawyer Kevin Thorn at Thorn Law Group at 202-349-4033 or contact us online to discuss your options.