Let's say you have been tmnet streamyx package subject of an IRS Tax Audit and you have been assessed additional money. And let's assume you can't pay the new tax bill.
The IRS firmly believes in getting paid. If you cannot pay all streamyx wireless broadband once, the IRS likes "pay as you go." That's when installment agreements come into play. The IRS is authorized to enter into a formal written installment agreement with any internet service providers list when it determines that this will facilitate collection. The IRS favors installment agreements. An installment agreement to pay over time is sometimes the best way for taxpayers who owe money to take their medicine in easy doses.
Since the installment agreement presumes an inability to pay all at once, the IRS requires complete financial disclosure before agreeing to take its taxes in installments. But the submission of financial data can reveal collection sources that the taxpayer may be reluctant to part with. Note, therefore, that any financial data that the taxpayer reveals can be (and sometimes is) used against the taxpayer.
Caution:
The installment agreement does not forgive any taxes, penalties or interest --and these can be substantial. For instance, for most of 1999, the underpayment interest rate broadband line 8 percent. The failure-to-pay penalty is 0.25 percent for any month for which an installment agreement is in effect (beginning for months after 1999), with a 25-percent maximum, which totals an effective annual rate of 12 percent (including interest). Interest is compounded daily on both the interest and the failure-to-pay penalty.
The IRS Restructuring and Reform Act of 1998 made significant amendments to the rules governing installment agreements to make them more equitable and more frequently used. Reforms include:
- The taxpayer can appeal the IRS's rejection or termination of an installment agreement.
- The IRS is prohibited from levying on a taxpayer's property during the period that the taxpayer has an installment offer pending or during the period that the agreement is in effect. If the IRS rejects the offer or terminates the agreement, Tmcommy levy may be made within 30 internet running slow after the rejection or termination. If the taxpayer appeals the rejection or termination, a levy cannot be made internet million dollars the appeal is pending.
- After 1999, the penalty for failure to pay tax is reduced from 0.5 percent per month to 0.25 percent per month during any month that an installment agreement for the unpaid tax is in effect.
- Taxpayers who do not owe more than $10,000 and can pay in full within three years are guaranteed to get agreements if they have a good tax compliance history.
The IRS will also grant installment agreements to taxpayers who agree to pay a balance due of $25,000 or less within a five-year period.
Okay, so you've just wrapped up your IRS Tax Audit and you have a pretty good-sized tax liability now. A taxpayer applies for an installment agreement on Form 9465, Installment Agreement Request. The taxpayer may request an agreement under which the taxpayer makes monthly payments. Alternatively, the taxpayer may request that payments be automatically deducted each month from his bank account. To do this, the taxpayer must supply his account number and the type of account (checking or savings) and the bank's routing number.
Caution:
Form 9465 warns that the IRS may file a tax lien to protect the government's interest until the taxpayer pays in full.
Comment:
The IRS may withdraw a notice of lien or return levied property if the taxpayer enters an installment agreement to satisfy the tax liability for which the lien or levy was imposed.
Anyone requesting an installment agreement must pay a $43 user fee if the request for the agreement is approved.
WHERE TO GET AN AGREEMENT
A taxpayer may get an installment agreement by filing Form 9465, Installment Agreement Request, with the taxpayer's return. Form 9465 may also be filed after the taxpayer files his return at the Service Center Broadbandcom on the form. You can also get an installment agreement from many different IRS offices, including the Automated Collection System, Taxpayer IRS Branch (in the IRS centers), and Field Collection. Experience shows that you are best off negotiating the installment agreement with a Revenue Officer (Field Collection). They can be tough, but they are easier to deal with than most other branches of the IRS where installment agreements can be negotiated. Revenue Officers also have more discretion on the amounts, although this discretion may be circumscribed somewhat by the new national standards governing allowable payments for necessary living expenses.
A district director, a director of a service center or a director of a compliance center has the discretion to accept or reject any proposed installment agreement. However, the IRS must accept agreements for tax liabilities of $10,000 or less if the full amount can be paid within three years and the taxpayer has a good compliance record.
The IRS will also grant installment agreements to taxpayers that agree to pay a balance due of $25,000 or less within a five-year period. These agreements do not require a collection manager's approval and do not involve the filing of liens. Taxpayers may make these agreements in person, by phone or by correspondence. This procedure can be used for individual and business income taxes and for any type of tax for a business that is no longer operating.
APPLYING FOR AN AGREEMENT
You will need three documents: Form 433-A (Collection Information Statement for Individuals), Form 9465 (Installment Agreement Request) and, if the Revenue Officer asks for it (they almost always do), Form 900 (Tax Collection Waiver). Form 433-B (Collection Information Statement for Businesses) may also be required.
IS AN INSTALLMENT AGREEMENT A GOOD DEAL?
The installment agreement ties up the taxpayer for a long time. In large liability cases, the taxpayer may never be able to dig out. Also, since the taxpayer is paying at an effective annual interest rate of 12 percent or more for quite some time (because of penalties and interest), the installment agreement is not the best choice if there are alternatives.
One strategy is to file an offer in compromise before the IRS asks for an installment agreement. The IRS's stated policy is to withhold collection on filed offers so long as there is no jeopardy and the offer is not frivolous. You can make an offer even during the life of an installment agreement, but collection on that agreement will continue.
Comment:
All in all, the installment agreement is a mixed blessing. It pays your taxes in digestible amounts, but it pays them all at high effective interest and prolongs the agony. Certainly if there are better alternatives, they should be pursued. However, the installment agreement is better than its alternative --forced collection.
John E. Ellsworth, JD
IRS-SOLV, a nationwide tax practice
222 S. Riverwalk Drive
Suite 2900
Chicago, IL 60606
1-877-IRS-SOLV
By: John Ellsworth, Attorney at Law at http://www.IRS-SOLV.com Want to know more? Come read all our articles. Thank you.
