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By Larry Weinstein, CPA | December 5, 2007
The 2nd Installment in the Series-Options Available to Taxpayers to Solve Their IRS Problems
Installment Agreement
If you cannot afford to pay in full your past tax liability, you can make a request for an Installment Agreement
An installment agreement is effectively a loan from the IRS. There is no credit check although penalties and interest will continue to be charged until the balance is paid off. This will allow you to pay off your tax liability through monthly installments.
The installment agreement may pay all (Full Pay) or part (Partial Pay) of your past tax liability.
If your total tax debt is less than $25,000 the IRS may consider you for a streamlined installment agreement under which you must complete the payment of your tax within 60 months. This type of installment agreement typically does not require as much financial disclosure.
If you cannot pay the amount within 60 months, you must make full financial disclosure of your income, expenses and assets. These Installment Agreements can be much more difficult to obtain. You must file Form 433-A or 433-B (or both). The IRS will analyze your Form 433-A or 433-B and use the information to determine the amount you can pay monthly. Your monthly income is compared to actual expenses and the amount of expenses considered “allowable” by the IRS. These allowable expenses may be much lower than what you are actually paying. The IRS ultimately has the discretion to decide on the payment amount.
Topics: Installment Agreements |
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