When you owe taxes, it may appear like paying the whole sum in a single payment is the only option to avoid having balances. While some taxpayers may be forced to do so, there are choices available to you that can help you settle your tax debts for a lower amount than you owe, such as an installment agreement.
The IRS has a variety of payment plan arrangements that you can make. One of the best ones is called the partial payment installment agreement that allows you to pay your tax debt for less than the full amount owed.
It’s very similar to the offer in compromise, but what’s different is that the IRS won’t take into account your assets.
This is a great plan for someone with a lower monthly income, but they have assets like a home or a retirement account. The IRS will only look at your monthly income and the expiration of the tax debt, so they’ll allow you to make a payment on a monthly basis until the tax debt expires for under the full amount.
How does an installment agreement work?
A partial pay instalment agreement with the IRS is a payment plan that allows you to pay off a portion of your unpaid taxes in monthly instalments until the tax debt ends. From the moment the tax return is submitted, the IRS has just ten years to collect a tax amount. Following that, the debt is eliminated. A PPIA, like an Offer in Compromise, can result in significant tax savings. The PPIA works with you to pay the IRS monthly until the tax debt is paid off. Taxpayers’ monthly payments vary depending on how much they owe and how much discretionary money they have each month.
A PPIA is an enticing alternative for taxpayers since it may save them thousands of dollars. Unfortunately, qualifying for this resolution is quite tough. You must have filed all necessary tax returns and paid any required estimated tax payments to be eligible. The IRS will not arrange a resolution with you if you haven’t done so. You must not have an active OIC to be eligible. You also won’t be able to file for bankruptcy.
The IRS will examine the following factors when determining if you qualify for a PPIA and what your monthly payment should be:
1. Your present income and your capacity to pay
2. Your current expenses
3. The value of your assets.
When applying for a PPIA, the IRS may request documentation for the costs you’re reporting, as well as current bank statements. They’ll look into nearly every element of your financial situation. They’re attempting to figure out if you have more money than you claim.
Should I get a partial pay installment agreement?
We can assist you in obtaining a PPIA if you believe it is the best option for you to pay your tax debt. Contact our firm today. We help people find tax relief and sometimes settle their tax debt for a fraction of what’s owed.
