An installment agreement is nothing more than a payment plan. When a taxpayer is behind on their taxes, one of their options for getting back into compliance with the IRS is to enter into one of these payment plans, allowing the taxpayer to pay their debt in monthly installments rather than in a single lump sum payment.
The statute of limitations (SOL) prohibits the IRS from attempting to collect on a given tax debt indefinitely, regardless of a taxpayer’s ability to pay. Inevitably, some taxpayers are unable to fully pay off
their tax debt before the collections statute expires (typically 10 years from the date of assessment - Speak to a tax professional before assuming the ). Still, the IRS recognizes that partial payment is better than no payment, so they encourage taxpayers to pay as much as they are able until the collection date has expired. The agreement that specifies the terms of this partial payment plan is called a Partial Payment Installment Agreement, or a PPIA.
Your specific tax situation will determine which payment options are available to you. Payment options include a short-term payment plan (paying in 120 days or less) or a long-term payment plan (installment agreement) (paying in more than 120 days).
Installment agreements can be tricky because just because you want one doesn't mean you qualify for one. If the numbers aren't there, the IRS may want to put you into currently not collectible status or CNC status. CNC status may be appropriate however an installment agreement may be better for your individual situation. I can't say this enough, but EVERYONE'S SITUATION IS DIFFERENT!!!! What may apply to one person may not apply to another. What would be a great tax resolution strategy for one person would not fit another. If you have made it far enough to be researching tax resolution, then you know by now that there are options available to you. Contact a tax professional to assist you with determining the right IRS tax debt resolution strategy that is right for you.
If you are in Charlotte, or elsewhere in the Carolinas or across the country and you are having tax problems and would consider hiring a professional to help you, give my office a call. With some general information from you about your IRS tax debt and your financial situation, we can identify the options that are right for you and your individual situation. Email me at [email protected] or submit a contact request form and we will make some time to speak to you at your earliest convenience.