Resolving Tax Debt by Paying in Installments

Tax debt is a pain not only because of the tax money that needs to be paid, but also because it puts taxpayers in a constant danger of IRS collection actions. Additionally, taxpayers also need to pay penalties and interest on any amount of tax debt that remains to be paid. Most taxpayers try to resolve their tax debt as soon as they can to avoid IRS penalties, interest, and collection efforts.

An IRS debt payment plan that many taxpayers are eligible to qualify for is the Installment Agreement. This payment plan is open for those who can pay the entire amount of tax debt, but not in a lump sum. Many taxpayers who cannot pay their entire debt all at once do have the financial capability to pay their tax debt over time. This payment plan allows them to pay the debt in fixed monthly installments over a period of time.

The length of an Installment Agreement and the amount to be paid in monthly installments depend on the financial strength of taxpayers. The IRS reviews the financial capability of taxpayers to determine their ability to pay the tax debt. Only taxpayers that are unable to pay their entire tax debt in a lump sum can qualify for Installment Agreement.

Paying tax debt in installments allows taxpayers to comfortably resolve their tax debt. Qualifying for this payment plan is fairly simple as compared to other payment plans. This payment plan is especially helpful when paying large amounts of tax debt.

It is in the interest of taxpayers to pay as much as they can in an installment because the IRS keeps charging penalties and interest on any amount of tax debt that remains to be paid. The longer the duration of an Installment Agreement, the larger the amount of tax debt to be paid.

As there are many kinds of Installment Agreements, taxpayers should consult a tax specialist or a tax company before choosing the most appropriate Installment Agreement to successfully pay their tax debt.

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