Payment Plan – IRS Assistance From Joe Mastriano, CPA
If you don’t qualify for any relief methods, or if using a relief method leaves you with an unpaid liability that you can’t pay right away, you could set up a payment plan.
Various Types Of Options
Small Dollar Payment Plan- You may easily be able to get up to 60 months to pay a liability if the principle plus any interest and penalties that are part of the original assessment is < $25,000 (notice I said original assessment). You can also buy this down below $25,000 by making an immediate payment. This can be tricky. If you say to the ACS person that you want to buy it down and they are not cooperative you will have to be very persistent. Here’s what you do. Go to the nearest IRS walk-in office and pay an amount that will bring the liability down below $25,000. Get a paid receipt. Then call ACS after you completed your 433a and 433b (if needed). Fax them the receipt if they want it. They can check their system the next day to verify it. Then show them that you can only pay the monthly amount you want to pay. It is a lot harder if you call up and say something like” hey, I was reading the collection manual on your website and it says I can have a 60 month installment agreement, so give it to me”. Boy, will they “give it to you”.
A currently not collectable (CNC) agreement- If as a result of filling out the collection information forms, the IRS can’t satisfy the payment of the debt by the end of the statute of limitations on collections another option is that they may put you in a CNC status. This means they have considered any equity in assets, and your ability to make reasonable monthly payments that will extinguish the debt in a reasonable collection time frame, and have concluded that you really don’t have the ability to pay. I say take this status from them. Make sure it’s coded on the system. Then work toward resolving the liability. The liability is still accruing interest and penalties (interest only if a trust fund liability), and you will have to pay it later. Try to set yourself up for an acceptable offer in compromise to get rid of the liability. See the chapter on offers.
Applicable to all agreements….
After getting the agreement don’t wait for notices from the the IRS to make your payments (a very common mistake). To allow for processing, send the payment in at least 10 days prior to the due date. Immediately after getting the agreement, or sooner in anticipation of the agreement, go to www.eftps.com and sign up personally, if the agreement is under your social security number, or sign up your business if the liability is under your companies ID number. That way you can make sure the payments are processed before the due date.If you get subsequent collection notices, they may be for other tax periods. If so, they need to be handled immediately. The agreement can be broken if you owe new taxes, so get this paid off immediately, or you may have to renegotiate your agreement to get it included. If the liability existed at the time you made the agreement, it needs to be put into the payment plan. It is so essential that all outstanding periods you owe for are put into the agreement when it is negotiated. If you owe business taxes as well as personal you may have to get the IRS to do two installment agreements. They are often reluctant to do this. An alternative would be to mention how the other account will be handled on the face of the 433d installment agreement form. Occasionally I have failed to get the IRS to do two agreements, and had to liquidate the business to get all the liability under the personal account. Fortunately, the taxpayer saves a lot of money in the process. This is one area in which people often get set up for a fall. Remember, you must have a plan that answers to your current personal and business liabilities, and any liabilities about to be assessed because of returns not processed yet by the IRS (late or otherwise).Other solutions are:Offer In CompromiseBankruptcy