Dealing with the IRS does not have to be a nightmare, you do have rights! Many people have a bad image of what they believe embodies the IRS, or Internal Revenue Service. The IRS is a large government organization in which its sole purpose is protecting the interests of the government and the tax revenue from individuals and businesses.
If you owe money to the IRS you should not run and hide! This is actually the worst thing you can do! The IRS wants to collect its money and in most cases will try to work with you. If you file your return but are unable to pay the taxes, in many cases the IRS will offer you what is known as a guaranteed installment agreement. A guaranteed installment agreement is for individuals who have liability of $10,000 or less.
There are of course restrictions with this type of agreement. The liability must be paid off within 36 months prior to the ten year period in which the collection statues would no longer be valid for the debt. In order to obtain a “guaranteed” installment agreement you must be eligible.
In many cases if you owe money the IRS will propose an installment agreement. If it’s an amount you can afford you can accept it. Or you can draft your own, or seek the advice and help of a tax professional.
The eligibility requirements are as follows:
The agreement arranged must allow for repayment of all liability to the IRS within the designated time frame.
You must be a current and compliant taxpayer 5 years prior to the installment agreement.
You will not be eligible for an installment agreement if you have had an installment agreement within the last 5 years.
To be eligible for an installment agreement you must not be able to be the liability up front.
Only individuals are eligible for this type of installment agreement. Businesses that owe $10,000 or less are eligible for a different type of installment agreement.
In cases which you owe less than $10,000 you may not have to disclose your financial information. In cases which you owe more, you may be responsible for a full disclosure of your financial assets, such as real estate, 401K’s, vehicles, bank accounts and other assets which may be deemed valuable by the IRS.
There is also a fee associated with obtaining an installment agreement of this type. If you agree to let the IRS use a direct debit into your account there will be a fee of $52.00. If you do not agree to let the IRS direct debit your account the fee will be $105.00. For taxpayers who are considered to be at or below poverty level guidelines there is a reduced fee of $43.00.
It should also be known that if you do manage to secure a guaranteed installment agreement, that you may have a tax lien field against your property to protect the interests of the IRS. Once the debt has been paid, it will be released. However, just as with any type of debt it will impact your credit and will show on your credit report for 7 years from the date it was paid in full.
Further information about installment agreements can be located at www.irs.gov
