Believe it or not there are new laws that have gone in to effect to help taxpayer’s that have trouble paying their tax debt. The IRS now offers a number of payment plan options which allow you to pay all (or some) of your tax debt over a period of time. These payment plans are separate from an Offer in Compromise. You may qualify for these payment plans even if you do not qualify for an Offer in Compromise. These payment plans include the Guaranteed Installment Agreement, the “Fresh Start Initiative” (72 Month Installment Agreement), the 84 Month Installment Agreement (IRS Pilot Program), the Partial Pay Installment Agreement.
Guaranteed Installment Agreement
The guaranteed installment agreement is available in limited cases where a taxpayer owes less than $10,000 (excluding penalties and interest). There are specific requirements that a taxpayer must meet to qualify for this program. In most cases, a taxpayer who qualifies for a guaranteed installment agreement will also qualify for a streamlined installment agreement such as the “Fresh Start Initiative”.
72 Month Installment Agreement (Fresh Start Initiative)
The new IRS 72 Month Installment Agreement is sometimes called the “Fresh Start program” or “Fresh Start Initiative”. This program helps individual taxpayers who owe less than $50,000 and wish to enter into a streamlined installment agreement which allows payment over 6 years (72 months).
In order to apply for the program, you must be in tax compliance. This means that you have filed at least the past six years of returns and made any required estimated tax payments (if applicable). If you are not currently in tax compliance, fear not! We can help you get to compliance and then help you apply for the Fresh Start program if you are eligible.
There are many advantages to this program. For example, the IRS will not generally require a financial statement; however, they may need some financial information from the taxpayer. Starting the program also means you are in good standing with the IRS so they will not take any additional collection actions. We can also use this program to release a federal tax lien!
84 Month Installment Agreement (IRS Pilot Program)
What if you have more than $50,000 in tax debt? Not a problem. The IRS started a new pilot program which allows for an 84 Month Installment Agreement. To qualify, your total tax debt must be between $50,000 and $100,000.
Like the Fresh Start program, you must be in tax compliance. If you have unfiled returns, we can help you get to compliance.
The main advantage of this program is that it provides more time to pay and you can qualify with a higher amount of debt.
Partial Pay Installment Agreement
Unlike the 72 month and 84 month installment agreements, a Partial Pay Installment Agreement allows a taxpayer to pay less than the full amount of their tax debt. Generally, if you cannot afford payments under the Fresh Start program or the 84 Month Pilot Program, you may qualify for a partial pay installment agreement.
However, unlike the 72 Month and 84 Month Installment Agreements, you may be subject to thorough financial review. The IRS can increase your payments if you have an increase in income.
Now is the time to take advantage of these less-stringent, more flexible programs before the IRS changes its mind again. Call now to schedule your free consultation so we can start you on your path to relief or request a free copy of our book, The Essential Tax Resolution Survival Guide.