An installment agreement is an arrangement between a taxpayer and the Internal Revenue Service (IRS) that allows the taxpayer to pay back their tax debt over time in regular, manageable installments. This type of agreement can help individuals or businesses who cannot afford to pay their full tax obligation at once and may face penalties for non-payment.
Here are some true statements about installment agreements with the IRS:
1. An installment agreement can be requested for most types of taxes, such as income tax, employment tax, and excise tax.
2. The IRS will assess penalties and interest on any unpaid balance of tax debt until it is fully paid off, even if you have an installment agreement.
3. The IRS offers several types of installment agreements, including a short-term payment plan (120 days or less) and a long-term payment plan (more than 120 days).
4. To qualify for an installment agreement, you must be up to date on all required tax returns.
5. If your tax debt is $10,000 or less, you may be able to establish an installment agreement without providing financial information to the IRS.
6. If you owe more than $50,000, you are required to provide detailed financial information to the IRS to establish an installment agreement.
7. Generally, the IRS requires that you make monthly payments to pay off your tax debt over time. The amount of your payment is based on your financial situation and the total amount of your tax debt.
8. If you miss a payment on your installment agreement, the IRS will send you a notice of default and may take additional collection actions.
9. You can modify or terminate an installment agreement with the IRS if your financial situation changes, or if you cannot make the required payments.
In summary, an installment agreement with the IRS can be a helpful solution for taxpayers who are struggling to pay their tax debts. It is important to understand the terms and requirements of an installment agreement and to make timely payments to avoid default and additional penalties. If you have questions about installment agreements with the IRS, consult with a tax professional or seek guidance from the IRS.