The IRS has the ability to grant the taxpayer the option to pay its tax liability over time if it will facilitate collection of their debt. If you are unable to pay the full amount of your debt then an installment agreement may be right for you.
The IRS is driven by the ability to collect outstanding tax debt as quickly as possible. When the IRS determines that you do not have assets that can be liquidated to cover your tax liability they will begin to look for other options. One of these options is to set up a payment plan that you can afford to pay on a monthly basis. To qualify, you must have some form of disposable income that can be applied to your tax liability monthly. This income is any income left over from all your monthly expenditures.
If the IRS grants you an installment agreement, you should remember to write down the information regarding the IRS employee that accepts your application. This can come in handy if you don’t begin to receive monthly installment statements in the mail. You will need their information to verify your agreement was accepted in a situation where they are claiming otherwise.
Fees Associated With An Installment Agreement
To instate an installment agreement you will be asked to pay a fee of $105 or $52 depending on whether you apply for a non-direct or direct debit agreement. If your income is below what is considered by the government to be poverty, you qualify for a reduced fee of $43. If you believe you qualify for this reduced fee, simply apply using Form 13844. If you default on your agreement and then try to reinstate it, you will be charged $45.
How To Apply For An Installment Agreement
If you owe less than $50,000 in total amount of back taxes, then there are a number of ways to apply for an installment agreement. Keep in mind that your account must not be in the collection process for you to apply.
If you owe less than $25,000 in total back taxes, you can apply for an installment agreement by filing Form 9465 and including it on the front of your tax return. If your total tax liability is between $25,000 and $50,000 you must use Form 9465-FS and include it on the front of your tax return. The difference between the two forms is the need for the taxpayer to show their ability to pay the monthly payment on Form 9465-FS.
Automated Payment Agreement
If you would like to apply and receive immediate approval of your installment application you can go to http://www.irs.gov and apply through the Online Payment Agreement application. To qualify for this instant application you must owe less than $50,000, have all of your tax returns filed and be current with your tax payments.
IRS Must Issue An Installment Agreement In Some Situations
The IRS is actually required to give you an installment agreement if you fall under the following criteria:
1. If you owe less than $10,000 in back taxes, excluding your penalties and interest that have accrued.
2. You must have been current with paying and filing your tax returns in the previous five years. You must not have entered into an installment agreement within the last five years as well.
3. When you apply for the agreement, you must agree to pay your liability in full within three years.
4.You must agree to comply with tax laws and the installment agreement up to the three year time frame that you are expected to pay the liability in full.
5.You must submit financial records to the IRS if requested. This is to verify that you are unable to pay your tax liability in full without an installment agreement.
Determining Your Monthly Payment & Date Of Payment
The IRS will ask you the maximum amount that you can afford to pay each month toward your outstanding tax liability. The IRS will determine whether your maximum amount is above their required minimum. If the maximum amount you can afford to pay per month is below the minimum amount the IRS want you to pay, they will require you to fill out a Collection Information Statement.
The Collection Information Statement is another process that the IRS will ask you to complete to verify that you have no other income to pay their minimum required payment. Form 433-A or Form 433-B will be required depending on whether you are an individual or a business. These Forms will ask the taxpayer to list their assets, liabilities, income and expenses to verify they are unable to meet the required minimum monthly payment.
The IRS wants to verify without a doubt that you cannot meet their minimum monthly payment. If it is determined that you cannot through the assets and income that you provide, the IRS will usually grant you the requested maximum payment that you applied for.
Cannot Collect During Pending Installment Agreement
The IRS is not allowed to collect on your tax liability through a tax levy if you have a pending installment agreement. The IRS can also not collect through a levy 30 days after you have been rejected for an installment agreement. If you file for an appeal for the rejection of your installment agreement, the amount of time your appeal is active the IRS will not be able to collect your tax liability through a levy of assets.
Termination Of An Installment Agreement
There are three instances that the IRS lists as authority to terminate an installment agreement. These include:
1. If the IRS finds out that the information that you had given them before entering into an installment agreement is false or inaccurate.
2. If the IRS believes that your financial position has drastically changed and you are able to pay off the remaining balance.
3. If you fail to timely pay your monthly payment or you do not provide the IRS with an updated financial statement showing why you cannot pay on time.
If the IRS decides to change or terminate your installment agreement, they are required to inform you 30 days prior to the date it becomes effective. You are able to appeal the decision to terminate your installment agreement 30 days before it becomes effective and 30 days after it becomes effective.
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The new IRS refund status app released by the IRS for the iPhone and Android has limited functionality, and its only redeeming value is that it replaces the IRS phone number, which is needed for you to learn the status of your refund. To get your IRS refund status and to receive by email chosen tax content you must use the IRS2Go app. This IRS app replaces a computerized recording that would inform you of your refund status or access to a human if you were able to speak to someone. So don’t have any high hopes of this app having great Web 2.0 technology that might let you scan your W-2 to the IRS instead of filing Form 1040EZ or 1040A. If you e-file your return, you can check on your refund within a few days. If you file a paper tax return, you will have to wait three to four weeks to check your IRS refund status.
IRS2Go Summary – Brief Summary of the IRS App
This IRS app contains the following options/functionality (if you want to call it functionality) “Get Your Refund Status,” “Get Tax Updates,” “Follow Us” and “Contact Us” options. You can subscribe to filing season tax updates provided by the Internal Revenue Service by entering your e-mail address to automatically get daily tax tips. Tax tips can help you with your tax planning and preparation needs. Consider using the free and helpful content that the IRS offers before your undertake to prepare your tax return. These updates are in plain English not in tax code legal jargon. The IRS just created more work for us, instead of tax updates residing in the app or in Google Reader, the IRS sends an email which has to be opened,saved or deleted.. They should ask Google about integrating some of their IRS instructions and publications into Google Reader while providing the taxpayer relevant content specific to the taxpayer’s particular tax situation. I am sure Google would love that. Do you think it would be helpful if the IRS provided us with relevant tax content, that we might otherwise not use, and how much benefit Google would receive if they worked with the IRS for this purpose. Another thought, should Google replace the current IRS email system with Gmail and then write code for Google Reader to integrate with IRS2Go.
Security Concerns for the IRS App
The IRS website says that privacy and security are paramount and there is brief privacy notice in the app. The IRS website says that your information will be masked and encrypted for security purpose. Until we learn more about the security certifications there is always a risk that phone carriers will be able to view your filing status and refund data and how secure is you social security number that you just entered into your app to access your account.? If your smart phone is lost or stolen, will another person be able to see this tax return information? Using the IRS phone number does offer greater security protection if this risk is a concern to you.
You will save time by using this free app rather than calling the IRS phone number to learn about your refund status. Many online tax preparation services provide a web based service for your to prepare your tax return online and offer a free refund tracking service which enables you to monitor your IRS refund status from their website. To File Free from the IRS website, your adjusted gross income must be $58,000 or less otherwise you will have to pay a fee to use an online tax preparation service, some of whom offer great deals. Don’t forget to, e-file early and get that refund working for you now and start tracking your IRS refund.
Learn to quickly decide on the right online tax software by going to my website [http://1040easyonline.com/2010-tax-return-review/] and reading four reviews of national online tax preparation companies and about other helpful IRS information available to you.