Atlanta & Fulton County Installment Agreement Attorney
Very few people or businesses can pay all the back taxes they owe in one fell swoop. The IRS understands this, and if the facts warrant it, may enter into installment agreements that allow taxpayers to pay off their debt over a longer period of time. The convenience of installment agreements does have a downside though. Fees, penalties, and interest are assessed when debts are not paid immediately, and the government may place a tax lien on a delinquent payer’s assets or garnish their wages. There are so many options out there for those who owe back taxes, and they all have different pros and cons, so working with an experienced attorney to figure out what tax resolution option is the best path forward is a good idea.
Is an installment plan right for me?
A taxpayer’s specific situation will determine whether an installment payment agreement is available to them, and which payment option would work the best for them. But there are some general guidelines to consider, which are our starting point when we meet with a client for the first time.
The first thing to recognize is that the IRS does not have to agree to allow a taxpayer to make installment payments unless:
- The amount of the tax owed (not including interests, penalties, and other additions) is $10,000 or less;
- The taxpayer, within the last five years, has not failed to file a return, has not failed to pay any tax shown on such return or has not entered into a prior installment agreement;
- Based on information provided by the taxpayer, the IRS has determined that the taxpayer is financially unable to pay the liability in full when due;
- The installment agreement will result in satisfaction of the full liability within thirty-six months;
- The taxpayer agrees to comply with the requirement of filing returns and making payments while the agreement is in effect.
If these terms are met, the taxpayer can set up an online repayment plan quickly and easily because the IRS must accept the taxpayer into their streamlined, guaranteed installment agreement process. In cases where these terms are not met (which happens a lot) the IRS has the discretion to accept or reject a taxpayer’s proposed installment agreement.
How do I know which installment plan is best?
At the Wooten Firm, we work with our clients to help them figure out if they qualify for a streamlined, guaranteed installment agreement repayment plan, or whether their desire to pay off their debt in installments will only be granted if Uncle Sam’s operative is in a good mood that day. We do a deep dive into our client’s financial history so we can determine what his or her next step should be, and what he or she needs to do to present a strong case to the IRS.
Depending on how much our clients owe, and their ability to make payments, we advise them whether it would be better to do a short-term or a long-term plan, or to do something completely different, like negotiating an offer in compromise, where the IRS may agree to accept a lower amount in exchange for getting one lump sum payment.
It is important for us to weigh all the options before helping a client apply for an installment plan so that our client gets the one that best suits his or her needs. We don’t want them to apply for a plan that is not a good fit and gets rejected by the IRS. And we don’t want our clients to get approved for a plan that they can’t see through to completion.
What happens if I default on my installment agreement?
If a tax debtor defaults on his or her installment repayment plan, the IRS will assess fees and interest, putting him or her in a worse financial position than he or she was in to begin with. A default can also prevent a debtor from getting an installment plan approved in the future or cut off other avenues of tax relief.
Furthermore, a defaulter’s credit score will take a hit. Credit scores are generally not impacted by entering into an installment agreement because it is not a loan, but failure to pay is a big no-no in the eyes of credit raters.
If a debtor remains in default, the IRS may put a tax lien on any property the debtor owns. This is a legal notice to creditors that there is outstanding debt that has not paid back. This can make it hard to get a loan or credit card, and it can complicate the process of selling any property with a lien attached.
Are there any downsides to entering into an installment agreement?
The upside to getting into an installment agreement is obvious — getting out of debt and getting on the right side of the law — but the downsides are important to note as well.
If a debtor doesn’t pay off all of his or her tax debt immediately, the IRS will charge interest, and assess fees and penalties. Entering into an installment agreement means the debtor is going to have to pay these extra costs, which can really add up over time.
As noted above, the IRS may also put a lien on a debtor’s property. This is a pretty drastic step though, so we can often work with the IRS to help our clients prevent this from happening in run-of-the-mill cases. We can help you with this.
Experienced Tax Attorney in Atlanta, Georgia
We all communicate with the IRS at least once a year, so talking with an adjuster directly, without the assistance of an attorney can seem natural. For some people, it is. For most of us though, having an experienced tax attorney talking to the IRS on our behalf is a better option. It can give you peace of mind to know that someone who actually understands all the acronyms and forms is on your side too, not just working against you. Even if you do decide to go it alone, talking with an attorney first to plan a strategy is a good idea. Contact us today to schedule a consultation.