IRS Installment Negotiations

A Comprehensive Tax Service

Taxpayers hear on commercials and advertising that call us if you owe $10,000 or more. Badass Tax Guys will tell you why. If you owe under $10,000 and can pay the IRS in full in less than 36 months (that includes ALL penalties and interest), you have a right to a Guaranteed Installment Agreement. There is no need to hire a tax relief firm in that circumstance. Additionally, no Federal Tax Lien will be filed as long as you keep your end of the agreement.

If you owe less than $25,000 and can fully pay the taxes, penalties and interest within 60 months, the IRS will normally approve an installment agreement as well. Of course, you may be paying $500 a month AND you must meet all CURRENT income tax obligations through proper withholding from your paycheck or estimated tax payments if you are self-employed.

If you fail to do this, your payment agreement will be defaulted, a Notice of Federal Tax Lien WILL be filed and levies WILL be served on your wages and bank accounts. There is a huge opportunity for the IRS to pursue taxpayers with harsh collection tactics when the installment agreement gets defaulted at his amount due.

However, as of 2012, if you owe MORE than $25,000 and less than $50,000, expect to find it MUCH more difficult to get a payment agreement approved. The IRS will require that this payment be auto drafted from your bank account or wages. IRS ACS (telephone contact unit) personnel or Revenue Officers (local collection IRS Officers) are making us give them as much as six months’ pay stubs, rent checks, utility bills, etc. and 12 months of medical expenses even when the medical expenses are very small.

A new program was introduced in 2005 called the Partial Payment Installment Agreement or PPIA. For the first time, the IRS can officially setup an agreement that will not pay the entire liability. You WILL need professional assistance as the IRS will closely scrutinize these cases and a Notice of Federal Tax Lien will be filed. Because the Offer program is so much less attractive today, the PPIA may be a good alternative in some cases.

Remember, that penalties and interest continue to accrue even while you are on the payment agreement. The interest rate fluctuates with the Treasury rate.
The only penalty that you’ll be hit with after a payment agreement is in place is the Failure to Pay penalty. It ranges from .5% to 1% per month to a maximum of 25% of the tax due.

In recent years the IRS has become so much more difficult  in setting up Installment Agreements that what used to take us 4-6 hours to set up is now taking 12-14 hours or more. Due to the IRS becoming so much more difficult to work with regarding this is why there is now a fee where it was a courtesy service in the past.