The economic struggles of 2020 have caused enough stress already, but this can quickly be amplified if you expect to pay in when tax season arrives.
Even worse: paying in when you’re already dealing with an installment plan to deal with debt from previous years. Keep these considerations in mind as you seek a solution for both your current and previous tax obligations:
Amending Installment Agreements
The IRS offers multiple opportunities for changing the terms of your installment agreement. Typically, when taxpayers picture revised installments, they imagine lower payments. Many, however, are forced to take the opposite approach and increase the amount they pay each month to account for additional debt accrued during the latest tax filing year.
Currently Not Collectible Status
If your new tax situation — coupled with financial hardships such as job loss — makes it impossible to keep up with installments, it may be possible to defer all payments by obtaining currently not collectible (CNC) status. This allows you to temporarily halt the collections process. Penalties will continue to accrue during this time, however, so it’s best to reserve this option for truly dire situations.
Avoiding Default
Whether you opt for an amended installment agreement, CNC status, or some other solution, it’s crucial that you avoid defaulting on your payment plan. Defaults can carry harsh consequences, including collection actions such as the dreaded federal tax lien. As a matter of public record, this notice alerts others to your tax debt situation. The surrounding financial implications can be harsh, so it behooves you to work with a tax resolution specialist to find alternative options.
At the Highland Tax Group, we deal with a variety of IRS installment complications, including plans that involve tax debt from multiple years. Look to us for comprehensive support as we help you secure the best possible solution for your stressful tax situation.