| Requesting an IRS Installment Agreement is certainly a | | | | helps the IRS determine how much "you" should pay |
| positive action towards resolving a tax liability. Yet, | | | | "them" each month. |
| there can be definite drawbacks to an Installment | | | | The form look harmless, but should not be taken lightly. |
| Agreement and the biggest drawback is: Interest and | | | | It is easy to make irreversible mistakes that could |
| penalties continue to accrual. It is possible to pay your | | | | affect the quality of your life. Example: A taxpayer list |
| tax bill for months and end up owing more than when | | | | expenses for his/her child's private school -- this is not |
| you started | | | | a valid expense! The IRS may fully expect for you to |
| It's easy to become discourage and wonder if you will | | | | forward that amount to pay your tax liability. Another |
| ever get the tax bill paid off. Not to worry, there are | | | | irreversible error: A taxpayer list his/her monthly cable |
| options. First things first. Taxpayers can not request an | | | | bill as a utility expense. Cable bills in American can run |
| Installment Agreement until all past due returns have | | | | anywhere from $12.99 to $150 a month. This is not a |
| been filed. | | | | valid or acceptable expense as far as the IRS is |
| Once all your tax returns have been filed, you can | | | | concerned. |
| contact a Tax Attorney or Enrolled Agent to discuss | | | | The IRS charges taxpayers a fee to set up an |
| the possibility of filing bankruptcy or an Offer in | | | | Installment Agreement. The fee for new Installment |
| compromise (OIC - this is when you settle with the IRS | | | | Agreements is around $100 (this could change) and |
| for pennies on the dollar) | | | | around $50 for agreements where payments are |
| Do you own a home? What is your annual income? | | | | deducted directly from the taxpayers bank account. |
| Do you have a 401K? Do you have assets that you | | | | Taxpayers with extremely low incomes, can apply to |
| could sell to pay off the IRS? These are questions you | | | | pay a lower fee. Visit irs.gov for updated tax codes. |
| can address with your Tax Attorney or Enrolled Agent | | | | Summary: Before you can request an IRS Installment |
| to see if you qualify for a Offer in Compromise | | | | Agreement, you must file all past due tax returns. It is |
| If you decide to pursue the Installment Agreement | | | | more cost effective to have a Tax Preparer or Tax |
| option and the IRS request a 433-A or 433-B, you still | | | | Accountant to complete the past due returns, before |
| might want to seek out professional help. A 433-A is a | | | | employing a Tax Attorney or Enrolled Agent to file a |
| Collection Information Statement for Individuals, and | | | | bankruptcy or Offer in Compromise. |