Trying to pay your tax debt all at once can be overwhelming, especially if you weren’t expecting to owe that much in taxes. The IRS understands that sometimes people can’t pay the taxes they owe in one payment. That’s why they have several different payment plans available to taxpayers to help them pay off their tax debt. One of those payment plans is the full pay installment agreement.
A full pay installment agreement is a payment plan with the IRS that has you pay a monthly payment until you pay off your total tax debt. You usually pay off your tax debt within 6 years or less. The monthly payment will vary from taxpayer to taxpayer and will depend on how much you owe and how much you can afford. You can set it up so the payment comes directly out of your bank account so you don’t have to worry about missing the payment.
It is very easy to qualify for a full payment installment agreement. Minimal paperwork is required to set up the payments. You will need to make sure that you don’t have any missing tax returns. You must have all required tax returns filed to be considered for any type of IRS payment plan or resolution. By setting up a full pay installment agreement, you can avoid having the IRS take collection action against you. You won’t have to worry about having your bank levied, your wages garnished or having a lien placed on your home, as long as you make your payments. If you miss a payment and end up defaulting the payment plan, the IRS can take collection action against you. So it is important that you don’t miss any payments and that file all your future tax returns on time and pay whatever taxes you may owe.
The bad side about a full pay installment agreement is that you may have a high monthly payment. While the IRS may work with you on an affordable monthly payment, they will use strict standards when determining what you can afford. So there is a chance your payment could be higher than you would like. You also aren’t likely to save money through this agreement. With a full pay installment agreement, you are agreeing to pay the full amount of taxes you owe. Sometimes you may be able to get penalties abated or interest lowered or removed, but the savings are usually minimal with this agreement.
If you are needing help finding an IRS resolution that works best for you, Polston Tax can help. We know all the available options for taxpayers and know what it will take for you to qualify. You can give us a call at 844-841-9857 or schedule your free consultation.