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.
Labels: Back Taxes, Installment Agreement, IRS, Tax Filing, Tax News, Taxpayers