Taxpayer Payment Options

This month, the IRS began sending out tax bills to taxpayers who filed their returns on time, but who were unable to pay their tax debt in full by the April deadline. Recognizing that this can place a significant financial burden on struggling taxpayers, the IRS instituted a series of programs that allow qualifying individuals to fulfill their tax obligations over time via a payment plan or an offer in compromise, so if you recently received a tax bill from the IRS and have questions about your legal options, it is critical to contact experienced Florida IRS offers in compromise attorney Ronald Cutler who can advise you.

Making Payments  

Taxes can be paid at any time during the year via credit or debit card, electronic payment, or through IRS Direct Pay, in which the funds are transferred directly from a bank account. Even taxpayers who cannot pay their debts in full should utilize these methods to pay off as much of their balance as possible, as this can significantly lower the interest charges and penalties applied to their account. Automating payments by using direct debit or a payroll deduction can also go a long way towards helping taxpayers avoid default

Setting Up a Payment Plan 

Taxpayers who owe taxes to the IRS also have the option of setting up a payment plan, which allows qualifying taxpayers to pay off their debt over time according to a predetermined schedule. Payment plan options include a short-term payment plan, meaning that the debt will be repaid within 120 days, or a long-term payment plan, which is also known as an installment agreement. However, only certain individuals qualify for these options. For instance, long-term payment plans are only available to taxpayers who owe less than $50,000 in combined tax, interest, and penalties, while short-term payment plans can be utilized by any taxpayer who owes less than $100,000 in combined taxes.

Settling with the IRS 

Aside from payment plans, taxpayers who still owe the IRS may be eligible for the Offer in Compromise program, which allows certain taxpayers to settle their bill for less than the full amount that is actually owed. To qualify for an offer in compromise, a taxpayer cannot be involved in an open bankruptcy proceeding, must have filed his or her federal tax return, and cannot be the subject of criminal prosecution for a tax crime. Further, business owners who must make quarterly payroll tax deposits must be up to date for the current and previous two quarters to qualify for an offer in compromise. Only if these requirements are fulfilled will the IRS consider approving a taxpayer for an offer in compromise based on his or her ability to pay, income, expenses, and asset equity.

Delaying Collection  

Finally, the IRS is sometimes willing to delay collection of a person’s tax debt until that individual’s financial condition improves. It is important to note however, that the debt of a taxpayer who is allowed to delay payment will continue to increase due to the accrual of interest charges and penalties until the debt is paid in full.

Call Today for a Free Consultation  

For help entering into a payment plan agreement with the IRS, please contact dedicated offers in compromise lawyer Ronald Cutler, P.A. at 386-490-9949 today. You can also reach a member of our legal team via online message.

Resources:

irs.gov/businesses/small-businesses-self-employed/temporarily-delay-the-collection-process

irs.gov/payments/online-payment-agreement-application