If you owe the IRS a large tax debt that you are unable to pay in full, the notices and prospect of the IRS coming after you can be intimidating. What can you do if do owe the IRS a large sum that you are unable to pay in full? Should you just ignore the IRS? Or, is there an option available for you to sleep well at night and get peace of mind?
Under Section 6331 the IRS can help you with by setting up an installment agreement. The installment agreement will help you to mange your tax obligation. You will be allowed to pay over time in order to get caught up with your tax obligations. How can a taxpayer qualify for an installment agreement?
If the specific requirements are not meant, the IRS will not even consider or allow a taxpayer to start an installment agreement. First, a taxpayer must be tax compliant. This means that all all required tax returns must be filed. The amount you owe is also important. Is an installment agreement best for you? It may or may not be, depending on your facts and circumstances.
Working with a tax professional who will do an analysis of your situation is highly recommended to determine if the installment agreement or possibly an offer in compromise is better for you.
If an installment agreement is the way to go then I recommend enrolling in a Direct Debit Installment Agreement (DDIA). This ensures timely payments directly from your bank account, reducing the risk of default. The monthly payment amount must settle the debt within 72 months or before the Collection Statute Expiration Date, whichever comes sooner.
Depending on the size of the amount owed, you may qualify for a Streamlined Installment Agreement. With this type of installment plan there are no forms required and no documents needing to be submitted. You are automatically accepted. For certain large amounts owed you will need to complete forms and submit documents. Working with a tax professional who can analyze your situation, will walk you through the process and make simple for you to resolve your tax debt and avoid further collection actions.
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