Although the COVID-19 pandemic has created discrepancies for the IRS and taxpayers this year, one thing has not changed– many Americans still owe the IRS for back taxes from previous years. With so many penalties and fees adding up for those unpaid taxes, it can become difficult to pay back the full amount owed at once.
There are several viable options for paying you back taxes to the IRS. An IRS installment agreement is one of the most optimal solutions to paying back taxes to the IRS. In some cases, you might be able to settle with the IRS or decrease the amount owed to them.
In order to determine the best possible solution for your situation, we recommend reaching out to our team for a tax relief consultation at 1-855-605-1500.
HOW THE IRS IS DEALING WITH COLLECTIONS DURING COVID-19
Many businesses and companies were forced to either shut down or make extreme modifications to their normal business work models– the IRS is just one of those businesses. In addition to the annual processing of tax returns, the IRS has now been tasked with processing stimulus payments and must work to maintain the new filing deadline. On top of that, many of the IRS’ employees are working remotely from home, further decreasing the speed and productivity of the IRS’ workforce.
Due to the adjustments the IRS has had to make to their workload as well as the financial hardships many Americans are experiencing, the IRS has announced the “People’s First Initiative.” This action means that the IRS will initiate unprecedented actions in order to alleviate the burdens of Americans facing tax issues. The IRS will implement changes such as delaying some payments for Installment Agreements and OICs (Offers In Compromise), minimizing enforcement action and more.
Additionally, the IRS is still in the process of distributing stimulus checks which means they are not currently processing paper returns. The good news is that the deadline to file taxes for 2019 has been extended for three months until July 15th, 2020.
THE BILL COMES DUE
Don’t be fooled by the IRS’ sudden leniency as they will soon begin taking enforcement actions once again. Many people who earned a high income in 2019 will probably owe back taxes and the IRS will take collection action.
When filing taxes, it is recommended that taxpayers also send in the required payment for the taxes due as penalties and interest will accrue after July 15, 2020. However, if you cannot pay the amount owed in full the IRS offers installment plans to qualified taxpayers in order to allow them to pay the amount owed over an extended period of time.
HOW INSTALLMENT AGREEMENTS WORK
There are two categories for IRS installment plans– taxpayers who owe over $50,000 and those who owe under $50,000.
TAX TIP: Hiring a certified tax specialist eases the process of dealing with the IRS. We recommend taxpayers reach out to a qualified tax resolution firm such as LifeBack Tax. We do all the work so our clients don’t have to contact the IRS. Our team works around the clock to ensure a structure resolution so you don’t have to worry about the IRS. Furthermore, you may even qualify for other relief programs or even penalty and interest abatement.
Balance Less Than $50,000
If you owe under $50,000, you can apply for an installment plan by visiting the official IRS website (www.irs.gov), mailing
Form 9465-FS Installment Agreement Request or by phone at 1-800-829-1040. You may be required to provide your Social Security number, date of birth, caller ID from your recent IRS notice, PIN number or AGI, bank address, employer address and the proposed monthly payment amount.
Balance Greater Than $50,000
If you owe over $50,000, you can apply for an installment agreement by filling out form 433-F Collection Information Statement. You may be required to provide information regarding your bank accounts, lines of credit, real estate, total number of dependents, assets, credit cards, wages, non-wage household income, monthly living expenses, down payment amount and proposed monthly payment.
IRS Installment Agreement Details
In order to initiate an IRS installment agreement, you will need to agree to a minimum monthly payment of $25. The IRS requests that you include your name, address, Social Security number, phone, tax year and return number on each payment issued. Installment lengths vary from 120 days to 60 months depending on your ability to repay.
IRS Installment Agreement Fees
Some installment agreements may take over 120 days to set up, thereby requiring a setup fee. The IRS charges a setup fee for direct debit agreement or for a standard agreement. You may qualify for a decreased fee if you meet the IRS’ low income requirements. The IRS charges a reinstatement fee for failure to pay bills and transfer your installment agreement into default.
Our team at LifeBack Tax specializes in tax resolution. We also serve clients virtually, so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to LifeBack Tax and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problems at 1-855-605-1500.