Monday, August 22, 2011

Paying Your IRS Bill -- Installment Agreements – Offers in Compromise

Installment Agreement
If you owe the IRS money and cannot pay the full amount, you may be feeling a bit nervous. The most important thing to remember is stay in contact with them. There are ways to pay off your tax debt. You shouldn’t ignore any letters they send you, phone calls or not file income tax returns.

If you cannot pay your tax debt in one payment, you may request an installment agreement from the IRS.  If you owe $50,000 (updated tax year 2016) or less, an installment agreement is pretty much guaranteed, and you can apply online.  However, if you have not filed any prior year tax returns, the IRS will probably require that you file those returns before the installment plan is set up. You should also be aware that penalties (failure to pay) and interest are charged until you pay off your debt.  If possible, you might try to borrow money from a credit union or bank, in order to avoid penalties, and possibly get a lower interest loan.  You can request an installment plan by clicking here or by calling the number on your tax bill.

If you owe more than $50,000, you may still qualify for an installment agreement. However, you may need to complete IRS Forms 433F and 9465, then mail the forms to the address on the bill. Or, you can call the phone number on the bill.

For more information about payment plans, read this IRS article.

Offer in Compromise (OIC)
An OIC is an agreement between the IRS and you that settles your tax bill for less than the full amount owed. The IRS doesn’t rubber stamp the OIC, so don’t expect it to happen unless your claim for being unable to pay holds up to intense scrutiny by the IRS. I mention the OIC as an option because I know that there people who genuinely cannot pay their tax liabilities, and this may be their only recourse.  Here is the link to the IRS article discussing the OIC 

If you need help filling out or filing the forms, Brycast can assist you.

Brycast Financial Planning in Austin Texas --- We Can Help
Income Tax Preparation in Austin Texas
contact: (512) 293-4170
Enrolled Agent and Investment Advisor Representative