The IRS offers payment plans for taxpayers who owe money, but it’s important to communicate and commit to the agreement. Late payments can result in additional fees and consequences. Taxpayers can apply for a payment plan online or by mail, and should continue filing annual taxes while paying off previous debts.
Owing money to the government can be overwhelming for a person who doesn’t have the resources to pay off that debt. In the United States, the Internal Revenue Service (IRS), which is a United States federal tax agency, has some flexibility that it can choose to extend to debtors. For example, a debt that is incurred over a year or more can be paid off in installments in many cases. To set up an IRS payment plan, a taxpayer may prefer to have a personal accountant assist or simply need to stay communicative with the agency to set terms and expectations that are realistic and satisfactory to the creditor.
Before making an IRS payment plan, it’s helpful to commit to abide by that agreement. The tax agency is often willing to agree to reasonable terms, but in exchange expects payments to be made on time. In the event that some unexpected circumstance occurs, a person must remain in communication with the IRS so that the agency is aware of the problem.
If a debtor is habitually late or misses payments entirely, it will cost the taxpayer more money and time than is necessary. The creditor can request payment in full and offer severe consequences if an individual does not show up during the debt payment process. An IRS payment plan can be reinstated once payments are missed, but not without additional fees being charged to the individual.
Depending on the size of the tax liability, a debtor can apply for an IRS payment plan online. The IRS has a request form on their website. To begin the process, a person can choose to call the agency or submit the application by traditional mail after printing the document from the Internet. A taxpayer has some influence over the terms of the IRS payment plan based on factors such as personal income and marital status. However, those terms must still be acceptable to the tax agency.
Once a payment plan has been formally established, the taxpayer can expect to receive monthly vouchers by which payments can be made routinely over the life of the debt. The IRS expects taxpayers to continue filing annual taxes even while previous taxes are being paid. A personal accountant who helps the taxpayer file each year should be involved with or at least aware of any prior IRS debt being paid. This professional can offer personal debt payment advice, but also needs to know to inform the taxpayer how the IRS can handle future refunds owed to the taxpayer until past debts are paid in full.
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