Perhaps for 10 years before the housing bubble burst in 2008, you ran a small real estate business. When the market crashed, you closed your doors and changed careers, leaving that chapter behind you. Now you just received a letter from the Internal Revenue Service, claiming that you owe $30,000 in back taxes, interest, penalties and related costs. Do you need to pay the whole amount in one lump sum? What are your options when it comes to delinquent taxes?
When you set up a tax payment plan with the Internal Revenue Service, you might have more questions than answers about what to expect. While the IRS works with taxpayers and accepts payment plans in many cases, the agency sometimes will work out a settlement with you for less than your total tax bill. However, you need to meet certain criteria to be eligible for an Offer in Compromise, or OIC, including no delinquent tax returns, making required current tax payments and complying with quarterly business tax payments.
Maximum Length and Amount of Payment Plans
Whether or not the IRS grants you an OIC, you should qualify for a payment plan for up to 72 months by requesting it if you owe less than $50,000. For amounts over this threshold, you will need to make arrangements with the IRS. However, during this time, you need to realize that penalties and interest will keep accruing. If these charges range from 8 to 10 percent annually, you might be climbing uphill in an effort to make your payments.
Paying Your Monthly IRS Tax Bill
After the IRS approves your payment, send them a cashier’s check or money order from a different bank so that they do not have immediate access to your account information.
You can also opt to ask your employer to deduct your pay using the IRS Payroll Deduction Agreement, Form 2159. Another option is paying via direct debit through your bank account monthly, thus minimizing the risk of a possible missed payment.
Call Us for Help
We understand you need to set up affordable payments to the IRS that works with your budget. You can reach us at 720-398-6088 for professional help with your IRS payment plan.