Reaching an Installment Plan for Repayment of Your Taxes

Who will be eligible to enter into an installment plan to pay back taxes?

Taxpayers who have fallen behind on their taxes may find themselves unable to make repayment in full.  Being delinquent on your federal taxes can have serious negative consequences resulting in potentially hefty fines.  Individuals who owe back taxes will be relieved to know that there are some options to repay the back taxes over a period of time.  For some delinquent taxpayers, the IRS will allow a repayment plan.  There are several options when it comes to repayment, and each plan comes with potential benefits and drawbacks.  Our Atlanta installment agreement attorney explains the basics of entering into an installment plan with the IRS below.

Eligibility to Enter into an Installment Plan

The IRS is not required to allow every taxpayer to enter into an installment plan. Only certain circumstances will require that the IRS allow an installment plan. If the following are met, you can quickly enter into a guaranteed installment agreement:

  • The amount of taxes owed is less than $10,000;
  • You have filed your tax returns for the previous five years and paid your taxes, without a previous installment plan;
  • The IRS has determined you cannot repay the full tax debt at once;
  • You will repay the debt within 36 months;
  • You will file all returns and pay taxes owed during repayment.

Even if you do not meet the above conditions, you may still be able to get the IRS to agree to an installment plan.  You will need to develop a repayment plan that the IRS will approve.  Your tax attorney will prove essential in assisting you to create a proposed repayment plan which will benefit you and be accepted by the IRS.

The first step towards developing a repayment plan will be assessing how much you can realistically afford to pay in each installment.  The IRS will not accept a repayment plan that you are unlikely able to stick to.  Take a look at your income and deduct your basic living expenses to arrive at your disposable income left over each month.  With your attorney’s help, consider whether a long term or short term repayment plan is best for your life and budget.  Remember that if you default on the repayment plan, you will face fees, interest, and loss of the ability to continue the installment plan.  As such, enter into any repayment plan with care.