IRS Expands Eligibility Criteria for Tax Installment Agreement Payment Plans

For many taxpayers who have accumulated significant tax debts, the ability to pay by installment agreement is extremely welcome. By setting up a monthly payment agreement with the IRS taxpayers can avoid some of the potential consequences of owing money to the IRS. For instance, taxpayers who set-up and follow payment plans will not have to worry about IRS attempts to garnish wages or bank accountants. Agreeing to pay via an installment agreement can also reduce the amount of penalties and interest a taxpayer will pay.  The ability to pay by installment agreement is government by certain rules, conditions, and requirements. Taxpayers and their debt must satisfy these conditions to be eligible to pay via an installment agreement. While the rules are generally rather expansive, certain taxpayers may not qualify. In the past, these taxpayers may have been forced to seek alternate forms of relief. However, a new IRS pilot program means that some individuals who would not have qualified for installment agreements in the past can now qualify.

Accountant Ted Kleinman of U.S. Tax Help can help taxpayers assess as to whether an installment agreement is likely to provide appropriate relief for the unique tax situation faced. If so, Ted can assess whether the taxpayer is likely to qualify and handle all aspects of the application. To schedule a private consultation with an experienced accountant, please call U.S. Tax Help at (541) 923-0903 today.

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Who typically Qualifies for an IRS Installment Plan?

The IRS recognizes that encouraging taxpayers to come forward and address unpaid balances voluntarily is frequently the most efficient and effective method of collecting tax debts. Drawing from this general presumption, the IRS’s “Fresh Start” initiatives expanded access to relief in the form of tax payment installment agreements. Under the fresh start program, taxpayer access to relief was expanded by:

  • Permitting taxpayer installment agreements to last an additional year.
  • Increasing the eligibility threshold for the amount of tax debt by increasing it from $25,000 to $50,000 for individuals.
  • Rules that permit a tax lien to be removed from the taxpayer’s property more expediently.

The IRS’s Fresh Start Initiative produced generally favorable results for the tax agency. In fact, the number of installment agreements set-up with automatic payments has more than doubled over the course of the last five years. Thus, many taxpayers have benefited from the program while the IRS has seemingly simultaneously increased its ability to collect assessed taxes.

New Program Further Expands on “Fresh Start” Initiative that Expanded Access to Payment Plans

At the end of September, the IRS announced additional expansions to its Fresh Start initiative. These new expansions to IRS installment plan eligibility include an increase in the allowable amount of tax debt. Under the new rules, the maximum amount of tax debt an individual can hold is increased from $50,000 to $100,000. However, this increase in the maximum allowable debt is contingent upon the taxpayer agreeing to pay via direct debit or a payroll deduction.

The new rules also increase the allowable payment plan duration from its current maximum of 6 years (72 months) to a new maximum duration of 7 years (84 months). Expanding the amount of time a taxpayer has to pay typically allows for reduced payments and minimizes the hardship experienced by the taxpayer. Finally, the new rules also remove requirements that mandated more expansive financial disclosures by taxpayers owing $50,000 or more in back tax debts. By relaxing this requirement, the burden associated with addressing back taxes is reduced and therefore more taxpayers may be willing to resolve their unpaid taxes through an automatic payment installment agreement.

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These new, relaxed provisions for IRS installment agreements are part of a temporary program. Therefore, time may be of the essence for certain taxpayers who would not otherwise be able to qualify for the program. The program is currently expected to run until September 30, 2017. However, the IRS may modify the program and its duration at any time.

Work with an Experienced US Tax Accountant when Addressing Unpaid Taxes

Whether you live in the United States or abroad, most taxpayers are hesitant to address the issues created by unpaid taxes. However, inaction typically results in additional complications including potential IRS liens against your home and other property. To schedule a confidential unpaid tax consultation with a CPA with more than 30 years of experience, call Ted at U.S. Tax Help today by dialing (541) 923-0903 today.