IRS Debt Help: Negotiating A Payment Plan

When you owe money to the IRS, the situation can feel overwhelming. The combination of the growing debt and the looming federal entity can lead to significant stress. But, remember, there are options available that can help you manage your tax debt more effectively.

One such option is negotiating a payment plan with the IRS.

Understand Your Situation

Before you start the negotiation process, it's crucial to understand your financial situation fully.

• Total Debt Owed: Determine how much you owe and whether it's possible to pay the amount in full immediately. If paying your tax debt outright causes financial hardship, a payment plan may be the most suitable option.

Explore IRS Payment Plan Options

The IRS offers several types of payment plans, also known as installment agreements. These include:

• Short-Term Payment Plan: If you can pay your debt within 180 days, this plan might be the best option. It involves fewer fees than long-term plans.
• Long-Term Payment Plan: If you need more than 180 days to pay your debt, a long-term payment plan, or installment agreement, might be more suitable.

Knowing your options will help you negotiate a plan that aligns with your financial circumstances.

Prepare Necessary Information

Before applying for a payment plan, gather all the necessary information.

• Gather Info: This includes your name, address, email address, date of birth, filing status, and social security number. You'll also need to have a record of your tax returns for the past few years and a clear understanding of your current financial situation, including your income and expenses.

Applying for a Payment Plan

You can apply for a payment plan online through the IRS website.

• Apply: During the application process, you'll provide the IRS with the necessary information and propose your monthly payment amount. Remember, it's essential to suggest an amount you can consistently pay to avoid defaulting on your agreement.

Wait for Approval

Once you've submitted your application, the IRS will review your proposal.

• Approval: They will consider your tax liability and your ability to pay when deciding whether to accept your plan. If approved, they will send you a notice outlining the terms of your agreement.

Staying Compliant

Once you've secured a payment plan, it's essential to stay compliant.

• Compliance: This means making your payments on time, filing all required tax returns each year, and ensuring the IRS is aware of any changes in your financial circumstances.

Failure to meet these requirements could result in a default on your agreement, leading to the IRS reinstating the full amount of tax owed and imposing additional penalties.

Consider Professional Help

Negotiating with the IRS can be a complex process. If you're unsure about anything, consider seeking help from a tax professional. They can guide you through the process, help you understand your options, and even negotiate on your behalf. This can result in a more favorable outcome and save you stress and time. 

For more information about IRS debt help, contact a local professional.